Dental Blog - ON, Canada

Buying a dental practice is one of the largest financial decisions most dentists will make.

For many buyers, one of the first questions that comes up is:

“Which CPA firm should I hire?”

That is a reasonable question. But during a practice purchase, there may be a better one:

“What expertise do I need at this stage of the purchase?”

When buying a dental practice, you need more than a general tax CPA. You need an advisor who understands dental practice acquisitions, due diligence, practice management software, patient chart trends, lender-ready forecasting, and the financial realities of ownership after closing.

The right advisor should help you understand not only whether the numbers are accurate, but whether the practice can realistically support your debt, clinical schedule, owner compensation, and long-term goals.

Key Takeaways

• Buying a dental practice is not just a tax transaction.
• Financial statements show what happened, but they do not always explain why.
• Practice management software and patient chart review can reveal risks that may not appear in the appraisal.
• Banks require a CPA-prepared forecast as part of the financing process.
• A CPA-prepared forecast with business plan should support both financing and ownership planning.
• The right CPA or advisor should understand dental practice operations, not just accounting.

Buying a Practice Is Different Than Filing a Tax Return

One of the most common assumptions buyers make is that any CPA who prepares corporate tax returns is automatically the right advisor for a dental practice purchase.

Tax knowledge is important. But a practice acquisition is not just a tax file.

You are buying a business.

More specifically, you are buying a clinical business with patients, providers, software systems, scheduling patterns, hygiene capacity, staff, collections, treatment mix, lease obligations, and cash flow.

During the acquisition process, your CPA or financial advisor should help answer questions such as:

• Is this practice worth the asking price?
• Can the practice realistically support my debt payments?
• What happens if my production differs from the seller’s?
• Are there operational risks hidden behind strong financial results?
• Does the patient base support the reported performance?
• Will the practice support my owner compensation and personal financial goals?
• What will the first 12 to 24 months of ownership look like?

These are not only accounting questions.

They are acquisition, operational, and ownership questions.

Firm Size Is Not the Most Important Factor

Some buyers assume that a larger accounting firm will automatically provide a better acquisition experience.

Firm size may matter in some situations, but it is not the most important factor during dental practice due diligence.

What matters most is whether the advisor understands the financial and operational drivers of a dental practice — and how those drivers affect valuation, risk, and future performance under new ownership.

During a practice purchase, your advisor should be able to:

• Review the practice appraisal critically
• Understand appraisal normalization adjustments
• Identify which adjustments appear reasonable, which may be unrealistic, and which require further support
• Explain how normalization assumptions impact valuation, financing, and future cash flow
• Understand practice management software reports
• Analyze patient activity and provider productivity
• Identify operational risks that may affect future cash flow
• Build a realistic CPA-prepared forecast with business plan based on the purchaser’s ownership plan
• Support lender-ready forecasting
• Help identify priorities after closing

A practice purchase is not simply about confirming how the business performed under the seller.

It is about understanding how the business may perform under you.

That distinction matters.

A practice may have strong historical results, but if production is concentrated in one provider, hygiene is underdeveloped, active patient trends are declining, collections are inconsistent, or appraisal normalizations are overly optimistic, the future may look very different from the past.

This is where experience matters most.

An advisor who regularly works with dental practices can recognize when assumptions in the appraisal or financials do not align with operational reality — and can ask the right follow-up questions before you rely on those numbers.

The right advisor helps you see those issues before you move forward.

Due Diligence Is More Than Reviewing Financial Statements

Financial statements are essential.

They show revenue, expenses, profitability, overhead, and historical performance. They help establish what happened in the business.

But they do not always explain why it happened.

A dental practice is a clinical operation. To understand it properly, the financial information should be reviewed alongside the practice activity behind it.

That may include:

• Production and collections
• Hygiene performance and capacity
• Active patient trends
• Treatment mix
• Provider productivity
• Recall effectiveness
• Patient attrition
• Scheduling utilization
• Accounts receivable
• Working capital and cash flow

These details help explain whether the financial results are supported by the day-to-day operation of the practice.

For example, two practices may show similar revenue and profitability.

One may have consistent collections, strong recall systems, growing hygiene, and a stable patient base.

The other may have declining active patients, underutilized hygiene, inconsistent collections, and production concentrated in one provider.

On paper, they may look similar.

Operationally, they are very different businesses.

Practice Management Software Helps Explain the Numbers

One of the most valuable sources of information during dental practice due diligence is the practice management software.

Financial statements may show what the practice earned. Practice management software can help explain how those results were generated.

Depending on the opportunity, a dental-specific due diligence review may include software reports related to:

• Production trends
• Collections compared to production
• Provider productivity
• Hygiene performance
• Treatment mix
• Recall effectiveness
• Scheduling utilization
• Accounts receivable
• Active patient trends
• Patient retention

These reports should not be reviewed in isolation.

The value comes from understanding how they connect.

For example:

• Has production remained steady while active patients are declining?
• Are collections keeping pace with production?
• Is hygiene performance supporting the valuation?
• Does provider productivity align with the buyer’s future clinical schedule?
• Are accounts receivable increasing over time?

These questions help determine whether historical performance is sustainable after the transition.

Patient Chart Review Can Reveal What the Financials Do Not

Patient chart review is another important part of dental practice due diligence.

The patient base is one of the most important assets a buyer is acquiring. It should support the reported performance of the practice and the future opportunity described in the appraisal.

Chart-level review may help identify:

• Patient activity
• Treatment patterns
• Recall behaviour
• Patient retention
• Attrition
• Future production opportunities
• Alignment between chart activity and reported performance

Digital chart audits can be completed virtually, which allows CFO of Smiles to support buyers across Canada. If a paper chart audit is required, this service is available only for practices located in the GTA.

This matters because a practice can appear profitable historically while still having patient trends that create risk for the next owner.

If active patient numbers are declining, hygiene capacity is underused, or treatment acceptance depends heavily on the seller’s clinical style, the buyer should understand that before relying on the forecast.

Patient charts and software reports help bring the practice to life beyond the financial statements.

Your CPA Should Help Build Your Financing Strategy

Banks require a CPA-prepared forecast as part of the financing process.

But a strong forecast should do more than satisfy the lender.

A CPA-prepared forecast with business plan should become part of your ownership roadmap.

The forecast should reflect more than historical results. It should consider the purchaser’s specific plan, including:

• Expected clinical schedule
• Procedure mix
• Staffing plans
• Financing structure
• Growth strategy
• Cash flow requirements
• Debt servicing capacity
• Transition timeline
• Planned operational improvements

This is especially important because the buyer’s future may not look exactly like the seller’s past.

Your production may differ. Your procedure mix may be different. Your staffing model, hours, leadership style, and growth priorities may change the financial picture.

A meaningful forecast should help answer practical questions:

• Can the practice comfortably support debt?
• What happens if production changes during the transition?
• How much cash should remain in the business?
• What level of owner compensation is realistic?
• When can equipment or technology be replaced?
• What investments may be required in the first few years?

These questions matter long after financing is approved.

Tax Planning Matters — But It Is Not the Only Priority

Tax planning is important throughout practice ownership.

However, during an acquisition, buyers often need to answer several practical questions first:

• Am I paying a fair price?
• Can the practice support my debt?
• Does the current production model fit my clinical style?
• What operational risks exist?
• Is the ownership structure appropriate from the beginning?
• What cash will be required after closing?
• What needs to happen in the first stage of ownership?

As the practice matures, tax planning may become a greater focus. But during the purchase process, due diligence, financing, cash flow, and operational fit are often the most urgent priorities.

The right advisor should understand both the acquisition process and the long-term financial management of a dental practice.

Questions to Ask Before Hiring a CPA for a Dental Practice Purchase

Before choosing a CPA or advisor for your acquisition, consider asking:

• Do you work specifically with dental practices?
• Have you completed dental practice due diligence?
• Will you review the appraisal critically?
• Will you review practice management software reports?
• Will you analyze patient charts or patient activity?
• Do you understand production, collections, hygiene, recall, and provider productivity?
• Can digital chart audits be completed virtually?
• If paper chart audits are needed, do you complete them in the practice location?
• How do you prepare a CPA-prepared forecast with business plan for lenders?
• Is the forecast customized to the purchaser’s plan?
• Can you help identify post-closing financial priorities?
• Will you continue supporting me after the purchase?

The best CPA for a dental practice purchase is not defined by firm size alone.

It is defined by having the right expertise for one of the biggest financial decisions of your career.

Due Diligence Does Not End at Closing

Buying the practice is only the beginning.

The first 12 to 24 months of ownership often determine whether the acquisition achieves its financial potential.

This is when the buyer begins managing cash flow, staffing, systems, patient relationships, hygiene performance, collections, debt payments, equipment needs, and financial reporting as the new owner.

Due diligence can help prepare for that transition.

A strong review can identify what needs attention before closing, what should be monitored during transition, and what should be prioritized in the first stage of ownership.

This is why working with an advisor who understands both the acquisition process and ongoing dental practice financial management can provide continuity during a major career transition.

Why Dentists Choose CFO of Smiles

CFO of Smiles works exclusively with dental professionals and provides dental-specific financial advisory, due diligence, and acquisition support for buyers across Canada.

Our team has reviewed over $233 million in dental practice appraisals and understands how financial statements connect to practice management software, patient charts, provider productivity, hygiene performance, collections, cash flow, and operational workflows.

Our due diligence process may include financial analysis, appraisal review, practice management software insights, patient chart review, customized CPA-prepared forecast with business plan, lender-ready forecasting support, and strategic acquisition recommendations.

Digital chart audits can be completed virtually, while paper chart audits are available only for practices located in the GTA.

Because buying a practice is not just about securing financing.

It is about building a successful business.

Frequently Asked Questions

Final Thought

When buying a dental practice, the question is not only:

“Which CPA should I hire?”

The better question is:

“What expertise do I need to make this decision with confidence?”

A dental practice purchase requires an advisor who can help you understand the numbers, the operation, the patient base, the forecast, and the future ownership plan.

Before you move forward, make sure the advice you receive matches the size and significance of the decision you are making.

Planning to buy a dental practice?

CFO of Smiles provides white-glove dental practice due diligence support for a limited number of purchasers at a time.

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