Due Diligence — The Actual Checklist

Get 3 years of tax returns + current-year P&L and monthly collections. You're looking for TREND (flat-to-growing collections), not just totals. Production isn't collection: verify the collection rate is 95%+ (below 90% is a leak you'll inherit).

Accounts receivable: healthy is ≈1.0× one month's production, with ≤20% of it older than 60 days. Bloated AR means the front desk is financing patients for free — and you're about to buy that habit.

Recompute owner earnings (SDE) yourself: owner salary + net + personal add-backs. If the broker's number needs five 'adjustments' to look good, that's information.

'Active patients' means seen in the last 12–18 months — get the count on that definition, not the database total. Ask for new patients/month (20+ is healthy for a GP) and the hygiene reappointment rate.

Audit ~10% of charts. You're looking for supervised neglect (watched-but-untreated disease), over-treatment patterns, and whether the dentistry matches your style. This is the single best detector of 'the numbers looked fine but the practice was rotten.'

Lease: term + options must total 5+ years or lenders balk; check the assignment clause and any demolition clause. Equipment: get an inspection — repairs are negotiated at the seller's expense. Staff: tenure, pay rates, and who might leave with the seller. Payer mix: what % is one PPO? (Concentration = risk.) Delta Premier dependency: if the seller's grandfathered Premier rates drive the revenue, YOU won't inherit them — model the haircut.