Buying a dental practice is often one of the largest financial decisions you’ll make in your career — frequently larger than any single investment, and more consequential than most mortgage decisions. It’s also a decision that tends to move fast once the right opportunity appears, which is exactly when it’s easiest to skip steps. What follows is the financial-planning side of that checklist — the pieces worth working through before you sign, not after.
What the asking price doesn’t tell you
A practice’s asking price is built around goodwill and a patient list, but goodwill is a projection, not a guarantee — patients who were loyal to the departing dentist don’t automatically transfer their trust to you. Before treating the asking price as a fixed number, it’s worth understanding how much of the practice’s revenue is genuinely transferable versus tied to the relationship you’re buying into. This is normally a job for your accountant working from verified financials, not the listing summary — but it directly shapes how much financing makes sense and what a reasonable purchase price actually looks like.
Financing and the personal guarantee
Practice-purchase loans are a specialized lending category — several Canadian lenders focus specifically on healthcare practice acquisitions, and terms can differ meaningfully from a standard business loan. Two things are worth clarifying early: what down payment the lender will actually expect (it varies more than most first-time buyers assume), and whether you’ll be signing a personal guarantee on the loan. A personal guarantee means the debt follows you personally if the practice underperforms — which changes how much other personal risk (insurance gaps, other debt) you can reasonably carry at the same time.
Incorporation: before, at, or after the purchase
Most dentists purchase a practice through a professional corporation rather than personally, both for the tax treatment of the acquisition debt and for the same income-deferral reasons professional corporations make sense for practicing dentists generally. But the timing matters — setting up the corporate structure correctly before the purchase closes is far simpler than untangling it afterward. This is a coordination point between your accountant, your lawyer, and your financial plan; it shouldn’t be decided by whichever entity happens to be easiest to set up quickly under a closing deadline.
Working capital: the number buyers forget to budget for
The purchase price covers buying the practice. It doesn’t cover the first several months of owning it, when revenue commonly dips while patients adjust to a new owner before climbing back — often called the transition period. Buyers who finance exactly the purchase price and nothing more sometimes find themselves financing payroll and overhead out of a thin personal cushion during exactly the months they can least afford surprises. Building a working-capital buffer into the overall financing plan, rather than treating it as a separate emergency, is one of the more common gaps we see.
Insurance considerations that change the moment you buy
Once you own the practice, your personal disability insurance needs to account for practice overhead, not just your own income — if you’re unable to work, the practice’s fixed costs (staff, rent, equipment financing) don’t pause. Overhead-expense coverage and updated personal disability limits are both worth reviewing as part of the purchase, not sometime after. If you’re buying with a partner or associate, a buy-sell arrangement funded by insurance is also worth discussing before you’re both invested and something happens to one of you.
Questions worth answering before you sign
- How much of the practice’s current revenue is realistically transferable, based on verified financials rather than the seller’s summary?
- What down payment and guarantee terms is my specific lender expecting, and how does that compare across the healthcare-focused lenders available to me?
- Is my corporate structure set up correctly before closing, in coordination with my accountant and lawyer?
- Have I budgeted working capital for a transition period separately from the purchase price itself?
- Does my disability and overhead-expense coverage reflect practice ownership, not just my personal income as an associate?
If you can’t answer most of these with confidence yet, that’s normal at this stage — it’s exactly what a proper pre-purchase financial review works through, alongside your accountant and lawyer, so the financing, the corporate structure, and your personal plan are all pulling in the same direction before you sign.
Where this fits into your broader plan
A practice purchase doesn’t happen in isolation — it interacts with your existing debt, your insurance structure, and your long-term retirement and estate plan. Getting the financing and structure right at the point of purchase is what lets the rest of your financial plan build on a stable foundation instead of working around a decision made under deadline pressure.
If a practice purchase is on your horizon, a free consultation is a good place to start — bring your accountant and lawyer into the conversation as it develops. Book a time here, or read more about financial planning for dentists across Canada. If you’re earlier in your career and not yet at this stage, our companion post on when a dentist should start financial planning covers what to prioritize before ownership is on the table.
This article is for general educational purposes and does not constitute personalized financial, tax, or legal advice. Practice acquisition involves significant legal, tax, and financing considerations specific to your situation — always consult a qualified accountant, lawyer, and financial advisor before entering into a purchase agreement.
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