Collections: the starting point, not the whole story
Annual collections (gross revenue) is usually the first number in a listing. It tells you the practice's scale — but by itself, it tells you nothing about profitability. Two practices with the same collections can have very different net incomes depending on staff ratios, overhead, payor mix, and owner compensation strategy.
Use collections to get to the right ballpark; use cash flow (SDE — Seller's Discretionary Earnings) to evaluate what you're actually buying. If a listing doesn't show SDE or a proxy for it, ask the broker.
The asking price: the broker's own number
The asking price on a listing is the listing broker's own figure. The Dental Practice Market carries it as published and does not set, estimate or compare it. Price and collections together cannot tell you whether a price is right: cash flow, the collections trend, payor mix and lease quality are what buyers, lenders and advisors weigh.
If the price is the first thing you notice, ask the broker what it is based on and what it includes, for example whether real estate or equipment is part of it, and take the answer to your dental CPA.
Operatory count and production capacity
Number of operatories tells you the physical production capacity of the practice. A practice with few operatories and high collections is probably close to the ceiling of what that space can produce, so growth may require more space or longer hours. A practice with many more operatories and the same collections may have idle capacity, which could be an opportunity or a sign of softer demand.
Also note the equipment age if it's disclosed. Near-end-of-life chairs or imaging equipment will be a capital expense shortly after close — budget for it rather than assume it's not coming.
Specialty
Specialty matters both for your credentials and for what you're buying into. A general dentistry practice is a different business than an orthodontic or oral surgery practice — different payor mix, different production model, different referral dynamics.
Multi-specialty practices can be attractive but add transition complexity; if production depends on a referring network the seller built personally, ask hard questions about how transferable that network is to a new owner.
Lease terms (if disclosed)
Many listings will indicate whether a lease is in place, its length, and sometimes the monthly rent. Remaining term and renewal options are material — a practice with little time left on its lease and no options is fundamentally different from one with a long remaining term and renewal options.
Whether the lease is assignable — and whether renewals transfer with assignment — is frequently not disclosed in the listing itself. This is an early question to ask the broker, not something to discover at the end of due diligence.
What listings don't tell you — the questions to ask before you sign the NDA
Collections trend: is the practice growing, flat, or declining? The trailing-12-months number in a listing is a snapshot; the trend is what matters for underwriting and for your confidence as a buyer.
Payor mix: fee-for-service vs. PPO vs. HMO/Medicaid. A practice with strong fee-for-service or in-network-PPO revenue has better margins and more pricing control than one heavily dependent on managed care.
Owner-dependence: how much of production is tied to the selling doctor personally? A practice where the owner does most of the production needs a clear transition plan to retain that revenue under a new owner.
New patient flow: how many new patients per month? This is the best leading indicator of whether the practice is growing its patient base or slowly running down an aging one.
Real estate: included or leasehold?
Whether the building is included in the sale is a significant variable that changes both the price and the financing structure. When real estate is included, the practice and the building are typically financed separately, often on different terms.
Leasehold practices (where you're a tenant) are more common; the quality of the lease becomes even more important because you're fully dependent on the landlord's cooperation for the life of your ownership.