Selling a dental practice is rarely one decision about price. The buyer needs a workable lease, a clear path for staff and patient records, and a closing package that reflects what the seller is actually promising. For the seller, decisions made before the letter of intent can determine how much of the price is secure at closing and what obligations continue afterward.
Here are nine issues to settle early if you are planning to sell a dental practice in Ontario.
1. Decide what is being sold before agreeing on the price
An asset sale transfers specified parts of the business, such as equipment, goodwill and contracts. A share sale transfers ownership of the corporation, with its history and existing obligations. Neither label alone tells you what happens to the lease, employees, receivables or patient records. The purchase agreement must address them.
Ask your accountant to model the tax consequences before committing to a structure in a letter of intent. At the same time, identify the seller, the buyer and any professional corporation involved. A deal that needs to be restructured after financing and diligence begin can lose momentum.
2. Prepare diligence without exposing patient information casually
A buyer will usually ask for financial statements, production and collection trends, overhead, equipment details, material contracts and information about the team. Organize these before marketing the practice. Decide who may see each category, when access begins and whether information can initially be shared in aggregate or de-identified form.
Patient records require particular care. The RCDSO's guidance on a change of practice ownership says that disclosure of personal health information to a potential purchaser for evaluating the practice requires a confidentiality agreement. Do not treat a general business sale process as permission to circulate identifiable charts without safeguards.
3. Read the lease before promising a closing date
If the clinic rents its premises, review the complete lease, amendments and renewal notices at the start. Check the remaining term, renewal options, assignment and change-of-control provisions, landlord consent, personal guarantees and any relocation or demolition rights.
An asset sale may require an assignment. A share sale can also trigger a change-of-control clause. The landlord may require financial information, security or a new guarantee. Make the relevant lease outcome a clear closing condition, with enough time to obtain it. A purchase agreement cannot itself grant the buyer a right to occupy premises the lease does not provide.
4. Match the equipment list to the financing records
Confirm which chairs, imaging units, sterilizers, computers and other items belong to the seller, which are leased and which secure a loan. The schedules should distinguish included equipment from excluded personal property and third-party assets. Specify who pays out financing, obtains discharges and handles any lease assignment.
A buyer's appraisal and an inventory may use different descriptions. Reconciling them before signing avoids a last-minute dispute over what the price includes.
5. Allocate staff costs and continuity expressly
For each employee, decide whether the buyer intends to offer continued employment, whether terms will change, and who bears any termination or severance costs if employment does not continue. Also review employment agreements, vacation balances, leaves and outstanding workplace issues.
Ontario's Employment Standards Act, 2000, section 9 can preserve service for statutory entitlement calculations when the purchaser employs an employee of a sold business. The treatment depends on the transaction and facts; the purchase agreement should allocate responsibility between buyer and seller rather than assuming that closing resets everyone's service.
6. Plan the patient-record transition as its own workstream
Identify the health information custodian, the successor custodian, the secure transfer method and the patient notification plan. The RCDSO says the selling dentist is responsible for transferring patient records to another health information custodian and for notifying patients in writing about the ownership change. The Information and Privacy Commissioner of Ontario also explains that custody, notification and secure transfer matter when a practice changes hands.
Set out who will send notices, respond to access requests, maintain records and pay the associated costs. Patient choice and access to records must remain workable after the sale.
7. Say exactly what happens to receivables and unfinished treatment
Does the seller keep pre-closing accounts receivable, or does the buyer purchase them? Who receives a payment that arrives after closing for treatment performed before it? Address insurance claims in process, credits, patient deposits, lab work and treatment plans that cross the closing date. These details affect the real amount each side receives, even when the headline price is fixed.
8. Negotiate the seller's role after closing alongside the sale
If you will remain as an associate, review the associate agreement at the same time as the purchase agreement. Compensation, schedule, notice, professional responsibilities and patient transition all affect the value of the arrangement. Consider proposed non-competition and non-solicitation restrictions in the context of the price, geography, duration and any other clinic you already operate.
Do not leave these terms to be settled after the buyer has completed diligence. The seller's transition may be central to the buyer's financing or business plan.
9. Make the conditions, promises and holdbacks measurable
The agreement should say what must happen before closing: financing, landlord consent, regulatory or corporate steps, discharge of liens and delivery of agreed records and schedules. Review each representation about collections, equipment, staff, litigation and compliance against the documents you can actually verify.
If the buyer proposes a holdback or post-closing price adjustment, define the amount, release date, evidence required and dispute process. The same applies to any working-capital or receivables adjustment. Ambiguity here can turn a completed sale into a later dispute.
A practical order of operations
- Speak with legal and accounting advisers before fixing the transaction structure.
- Collect the lease, financials, equipment documents, employment agreements and corporate records.
- Set confidentiality rules for buyer diligence and patient information.
- Negotiate a letter of intent that identifies price mechanics, conditions and timing.
- Review the purchase agreement and any associate or landlord documents as one connected package.
- Prepare the closing and patient transition well before the target date.
The strongest sale plan is one that accounts for what happens after the money changes hands. A clear lease path, staff allocation and patient-record process can protect both the seller's proceeds and the practice's continuity.
Thinking about selling? Contact Dentist Legal to discuss your practice, timing and proposed deal structure. Dentist Legal is operated by DevLaws Professional Corporation.
This article is general information, not legal advice for a particular situation. Contact us to discuss your matter.
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