INSIGHTS: Legal essentials for buying a dental practice

March 4, 2024


Georgina Odell

Whether you are starting a new dental practice or buying an existing business, there are important legal considerations you cannot afford to ignore. In this article, Principal Georgina Odell provides a snapshot of the important legal requirements to help ensure you launch your dental practice with the best possible start.

Your business structure

It is essential to take advice from your accountant regarding the most appropriate and tax-effective structure for starting or acquiring your practice. The available options include structuring your business as a sole trader, forming a partnership, or as a company with or without a trust. The most appropriate structure will be advised based on your individual circumstances.

Purchasing an existing practice

Due diligence

It is important to undertake a financial and a legal due diligence exercise before exchanging contracts for the purchase of a dental practice.

During this process your accountants should be checking and verifying the financial statements of the business. Your solicitors should also advise you on the terms of the lease of the premises, and check and verify matters such as whether the business name is registered and, if so, which entity owns it.

Negotiating the contract

Usually, there are several iterations of the contract for sale of business, as the fine details of the transaction are negotiated and recorded in the contract. It is important that a buyer has carefully read and understands the contract.

Exchanging contracts and paying the deposit

When all parties are happy with the content of the contract the parties will be asked to sign the document (most often using electronic signatures) and contracts will be formally exchanged.

At this point the contract is legally binding, and the deposit is paid by the buyer to the seller. The deposit is usually payable before the buyer has drawn down on its loan. Therefore the buyer will usually need cleared funds of its own in order to pay the deposit.

Conditions precedent

There will usually be conditions precedent on completion of the purchase, such as:

  • receipt of an offer of finance (if this has not been received by the time contracts are exchanged)
  • the lessor of the premises lease consenting to the assignment of the lease to the seller, and
  • any variations that are required to the lease.

Obtaining finance

We recommend that buyers obtain their written offer of finance as early as possible. This is important so that both the buyer and the buyer’s solicitor can be aware of any conditions that will be applied to draw down on the loan.

For example, if the lease of the premises has expired, there is likely to be a condition on finance for the grant of a new lease of a certain minimum term. Equally, if the lease has only a few years remaining, with no option to renew, there may be a condition on finance for a variation to the existing lease to extend it to for example, an initial five year term with two further options to renew for five years each.

These requirements should be written into the contract as conditions precedent to completion. In doing so, a buyer can rescind the contract and recover the deposit paid, if it is not possible to obtain a suitable new lease or variation to the lease.


Does the contract of sale refer to employees? Close consideration should be given to any requirements regarding employees in the contract of sale.

Every contract for sale of a business is different, but the buyer may be required to offer employment to all existing employees, or the buyer may have a discretion whether to offer employment or not. If the buyer would like the ability to interview the employees, this should be negotiated as a term of the contract as this is not a standard provision.

Buyers should consider whether there is to be a reduction on the purchase price for all, or a proportion of, the value of accrued employee entitlements.

Assigning the lease

In considering whether to consent to assignment of the lease, a lessor will often require information about the buyer to be given to them. This may involve a resume and statement of assets and liabilities being provided to the lessor.


Once the lessor’s consent to assignment has been obtained, and any other conditions precedent to completion are satisfied or waived, the parties can proceed to completion of the sale and purchase. This is when the balance of the purchase price is paid, the goodwill, the business name, the patient records, assets and equipment of the business are transferred to the buyer.

A buyer’s lawyer will carry out searches of the Personal Property Securities Register to ensure that any registrations of security interests are discharged by the seller either before or on completion.

This article was written by Principal Georgina Odell.  Please contact Georgina if you have any questions or would like more information. 

Disclaimer: This information is current as of March 2024. This article does not constitute legal advice and does not give rise to any solicitor/client relationship between Meridian Lawyers and the reader. Professional legal advice should be sought before acting or relying upon the content of this article.