The two structures in one paragraph
In an asset purchase, you buy specific things from the seller: the equipment, supplies, patient records, goodwill, phone numbers, website and the right to take over the lease, as listed in the purchase agreement. You do not buy the seller's company. In a stock or equity purchase, you buy the ownership interest in the company (usually a professional corporation or LLC) that runs the practice, so you step into the whole entity as it stands, history included.
Asset purchase: you choose what you take
The purchase agreement names the assets being acquired and, just as importantly, the obligations you are assuming. By default you are not taking on the seller's past debts, tax history or employment claims unless the contract says so. That clarity is the main reason asset purchases are the usual structure for practices.
The trade-off is paperwork. Because the seller's company is not changing hands, each thing that has to move to you has to be moved on purpose: the lease, equipment leases, vendor and software contracts, your own enrollment with insurance plans, and the patient records.
Stock or equity purchase: you buy the company and its history
Because the company stays the same, contracts and permits held by the company can stay in place without being reassigned, and there are fewer third-party consents to chase. The cost is that you inherit everything the company has done: tax filings, employment matters, billing and coding history, and exposure for treatment already provided. Buyers who consider this route usually want deeper due diligence and written protections from the seller, such as indemnities or an escrow, which your attorney would negotiate.
Stock purchases are less common for practices, in part because of those inherited liabilities, and because many states limit who may own a dental practice entity.
What has to move to you in an asset purchase
Lease: the landlord's consent is usually required, and it is frequently the slowest step, so raise it early. Equipment leases and vendor contracts: each has its own assignment terms. Insurance plans: you will generally need to be credentialed with each plan in your own name, and that can take weeks or longer, so ask which plans the practice relies on and start early. Employees: the seller's employment ends and you offer new employment; how accrued time off and benefits are handled is negotiated. Patient records: transfer is governed by your state dental board's rules and privacy law, so follow the process your attorney lays out. A dentist's own license, DEA registration and individual NPI are personal and never transfer.
Why the structure is a negotiation: taxes
In an asset purchase the price is allocated among the asset categories, such as equipment, supplies, goodwill and any covenant not to compete, and both buyer and seller report that allocation to the IRS on Form 8594. For the buyer, goodwill and a non-compete acquired in connection with buying a business are generally amortized over fifteen years under Section 197; equipment is depreciated under its own rules. The seller's tax result can differ materially between an asset sale and a stock sale, and between entity types, which is why sellers and buyers often want different structures.
None of that can be settled by a general guide. Ask your dental CPA to model both structures and the allocation before you sign a letter of intent.
Who is allowed to own the practice
Many states restrict ownership of a dental practice entity to licensed dentists, and some allow management arrangements for non-clinical services. Those rules shape which structures are available to you, particularly if you are buying with partners or with outside capital. Confirm your state's rule with your attorney before you commit to a structure.
Questions to bring to your attorney and CPA before the letter of intent
Which structure is the seller expecting, and why? Which liabilities, if any, am I assuming, and where does the agreement say so? How will the purchase price be allocated, and who prepares it? Which contracts need consent to move, and who is responsible for getting it? Which insurance plans do I need to be credentialed with, and how long will that take? What protections do I have if something from before closing surfaces later?
Your letter of intent normally states the structure, so these questions are best answered before it is signed, not after.