> ## Documentation Index
> Fetch the complete documentation index at: https://www.practiceownersguide.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Buying: valuation, LOI, and due diligence

> The deal mechanics of a practice acquisition: what it's worth, what the LOI locks, and the diligence checklist.

The market overview lives at [Buy a practice](/guides/buy-a-practice). This
page is the deal itself.

## Valuation

Solo practices commonly trade around 60-85% of annual collections (dental) or
a multiple of seller's discretionary earnings; larger groups price on EBITDA
multiples. Whatever the method, the number you're really buying is
**transferable cash flow**: collections that survive the seller leaving,
verified against remittances, not the PM system's charge report.

## The LOI

Non-binding on price but it locks the shape: price and what's included,
**asset vs. equity purchase** (asset deals dominate small practice M\&A, buyers
avoid inherited liabilities and get a tax basis step-up; equity deals keep the
TIN and payer contracts alive, which matters in CPOM states), exclusivity
period, seller transition terms, and who pays which costs. Get deal counsel
before signing the LOI, not after.

## Due diligence

| Area               | What to verify                                                                                                                                                                           |
| ------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Financial          | 3 years of tax returns vs. P\&Ls vs. bank deposits; payer mix; AR aging and [denial rate](/guides/work-your-denials)                                                                     |
| Revenue durability | Top-referrer concentration, active-patient counts, recall/rebooking rates, provider-dependent production                                                                                 |
| Payer contracts    | Assignable? Rates vs. market ([fee schedules](/guides/payer-contracting)); credentialing timeline for **you**, which starts now ([the gap](/guides/get-credentialed))                    |
| Legal              | Lease [assignment](/guides/negotiate-your-lease), liens, malpractice history, staff [classification](/guides/hiring-w2-vs-1099), compliance posture ([HIPAA](/guides/hipaa-in-one-week)) |
| Operational        | Equipment age, EHR data migration terms, staff comp vs. market                                                                                                                           |

The classic buyer mistake is closing before your own credentialing is filed:
you own the practice but can't bill in-network for 90+ days. Sequence
credentialing from LOI signing, and price the gap into working capital
([loan sizing](/guides/practice-loan-options)).

## Related

* [Buy a practice](/guides/buy-a-practice)
* [Get a practice loan](/guides/get-a-practice-loan)
* [Get credentialed](/guides/get-credentialed)
* [Negotiate your lease](/guides/negotiate-your-lease)
* [Sell your practice](/guides/sell-your-practice)