Business Succession Planning For Dental Practice Owners – Part II

Jordan Uditsky • April 2, 2026

How Buy-Sell Agreements Determine the Success of Your Transition

You spent years or decades building your dental practice from the ground up, recruiting talented associates and staff, cultivating a loyal patient base, and investing in the technology and infrastructure that have made it an enduring success. You made that happen, but what happens if something were to happen to you? What if you pass away suddenly and unexpectedly, you become disabled or incapacitated, or you simply want to call it a day and retire? Without a properly and thoughtfully drafted buy-sell agreement in place, your departure or absence could be the beginning of the end for the practice and the legacy you spent a career building.

 

A buy-sell agreement, sometimes called a buyout agreement or a business continuation agreement, is the defining document of your practice’s business succession plan. It is the key to every transition, no matter the nature of the business or industry, but having a buy-sell agreement in place is particularly critical for dental practice owners. Professional licensing requirements, patient relationships, and practice goodwill create layers of complexity that most other business owners don’t face. As we discussed in our first post in this series on succession planning, now is the time to work with your counsel to get this done, before circumstances deprive you of the opportunity to plan for your future and that of your practice.


Are you interested in speaking with one of our attorneys? Click here to contact us now.

 

What Is a Buy-Sell Agreement?

 

A buy-sell agreement is a legally binding contract between co-owners of a business, or between an owner and the business itself, that governs what happens to an ownership interest when a triggering event occurs. Common triggering events include the death of an owner, permanent disability, retirement, divorce, personal bankruptcy, or the voluntary decision to sell.

 

In the dental practice context, these events carry additional stakes and greater potential risks or disruptions. Unlike other business owners, who can choose pretty much anyone they want to take over their ownership interest – a family member, a company executive, employees – state laws typically prohibit non-dentists from owning a dental practice. That means if a co-owner dies and their ownership interest passes to a non-licensed spouse or heir, a practice could face serious legal and regulatory exposure. A well-structured buy-sell agreement prevents that scenario by dictating exactly who can own an interest, under what conditions, and at what price.


Cross-Purchase vs. Entity Redemption

 

There are two fundamental structures for buy-sell agreements, and the right choice depends on the number of owners, your tax situation, and your long-term objectives.

 

  • Cross-purchase agreement. In this arrangement, the remaining owners purchase the departing owner's interest directly. This structure works well in smaller two- or three-dentist practices and offers the surviving owners a stepped-up tax basis in the acquired interest, which can reduce capital gains exposure if the practice is later sold.
  • Entity redemption agreement. Here,  the practice itself buys back the departing owner's interest. This is simpler to administer in larger group practices and avoids the logistical challenge of each owner carrying separate life insurance policies on every other owner.

 

The Valuation Situation

 

Valuation of the practice is probably the single most contested issue in buy-sell disputes. When that triggering event happens, and a buyout time arrives, determining how much the practice and its ownership interests are worth, and agreeing on how to get to that figure, can be fraught with disagreement or conflict.

 

Dental practices have unique valuation challenges. Patient retention rates, the personal goodwill of the departing dentist, the transferability of key referral relationships, and the quality and age of equipment all factor into value. General business metrics and the dollars-and-cents on a balance sheet do not adequately capture these nuances. The agreement should specify the valuation method upfront, whether that is a fixed price updated annually, a formula based on collections or EBITDA, or a third-party appraisal conducted by a healthcare-focused business valuator. Leaving valuation undefined, or using a formula that made sense years ago but no longer reflects market reality, is a recipe for litigation.

 

Funding the Buyout

 

A buy-sell agreement is only as good as the funding mechanism behind it. The most common method is life insurance, which provides an immediate lump sum in the event of an owner's death. Disability buyout insurance is equally important and significantly underutilized in most funding arrangements.  

 

For retirement or voluntary buyouts, installment payment structures are the norm. The agreement should specify payment terms, interest rates, and security arrangements, such as a promissory note secured by the practice assets, so that neither the buyer nor the seller is left in an untenable position.

 

Dental Practice-Specific Provisions

 

In addition to limitations on who can acquire ownership interests in a dental practice, other issues unique to the profession should be addressed in the buy-sell agreement. Restrictive covenants. Non-compete and non-solicitation clauses are subject to ever-changing state laws governing their allowable scope and enforceability, so they must be carefully drafted to withstand judicial scrutiny in order to protect the purchasing owners from having the departing dentist reopen two miles away and call every former patient.

 

Associate buyout pathways, if your practice uses them to attract and retain talent, should also be addressed to avoid disputes when an associate is ready to exercise their option. Additionally, if your practice operates under a DSO (Dental Support Organization) model or has any affiliation with a management services organization, those contractual relationships need to be accounted for in the buyout structure.

 

Do Not Wait for a Crisis to Start Planning

 

If you are a dental practice owner and you do not have a current, properly funded buy-sell agreement in place, you, your practice, and your retirement plans are all flying without a net. Don’t let all you’ve worked so hard for come crashing down. If you have questions or would like to discuss business succession planning for your dental practice, please call Grogan, Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation.

 

At Grogan Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you.

 

Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices. This blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.

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Most relationships, whether personal or professional, start with a certain level of mutual trust and respect, compatibility, and shared goals and priorities. But those characteristics don’t always last, and a once-promising partnership can devolve into disputes, distrust, or outright hostility. The dentist-patient relationship is not immune to such deterioration. There may come a day when the differences between a dentist and their patient make continued treatment undesirable or impractical. A patient, of course, is free to call it quits with their dentist at any time, or the patient and dentist can mutually agree to part ways. But when a dentist wants to stop treating a problematic or disruptive patient and terminate the relationship, things can be a bit stickier. 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Accordingly, a dentist may not end a patient relationship because of the patient’s race, religion, gender, color, age, national origin, disability, or other characteristics protected by federal and state anti-discrimination laws. Notably, political opinions are not a protected characteristic under the law. Common reasons a dentist may justifiably terminate a patient include: Hostility or abusive behavior toward the dentist, staff, or other patients Harassment or sexual abuse of dentist, staff, or other patients Repeatedly missing appointments Refusal to undergo recommended testing or treatment Lack of trust or confidence in the dentist’s abilities or recommendations Consistent failure to follow office policies Showing up to appointments under the influence of alcohol or drugs Refusing to adhere to infection-control precautions and policies, such as masking Nonpayment Patient Dismissal vs. Patient Abandonment A dentist who chooses to dismiss a patient can’t simply show them the door, send them a break-up text, or refuse to answer their calls. Dentists must end the relationship such that they avoid any claim that they have abandoned their patient. According to the ADA’s Principles of Ethics and Code of Professional Conduct Section 2.F.: Once a dentist has undertaken a course of treatment, the dentist should not discontinue that treatment without giving the patient adequate notice and the opportunity to obtain the services of another dentist. Care should be taken that the patient’s oral health is not jeopardized in the process. Patient abandonment is a serious ethical violation. For example, the Illinois Dental Practice Act lists “abandonment of a patient” as one of the many reasons the Illinois Department of Financial and Professional Regulation may revoke, suspend, refuse to issue or renew, reprimand, or take other disciplinary or non-disciplinary action against a dentist. A dentist also exposes themself to a malpractice claim if injuries result from their termination of the patient at the wrong time during the course of treatment or without proper notice. 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Additionally, a dentist experiencing issues with a patient should contemporaneously document all communications, incidents, statements, or behavior suggesting a breakdown in the relationship. Of course, while a dentist can control how they handle the end of a patient relationship, they can’t control how the patient will react to being “dumped.” Even when the dentist acts professionally and cordially, as they should, there is no guarantee that the patient will do the same. If a patient responds with hostility or anger, tread carefully and do not respond in kind. Contact Us With Any Questions or Concerns If you have any questions or concerns about ending a patient relationship, please give us a call. At Grogan, Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices, and this blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
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A doctor is sitting at a desk talking to a patient.

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By Jordan Uditsky • March 9, 2026
Most relationships, whether personal or professional, start with a certain level of mutual trust and respect, compatibility, and shared goals and priorities. But those characteristics don’t always last, and a once-promising partnership can devolve into disputes, distrust, or outright hostility. The dentist-patient relationship is not immune to such deterioration. There may come a day when the differences between a dentist and their patient make continued treatment undesirable or impractical. A patient, of course, is free to call it quits with their dentist at any time, or the patient and dentist can mutually agree to part ways. But when a dentist wants to stop treating a problematic or disruptive patient and terminate the relationship, things can be a bit stickier. It is crucial that a dentist handles the break-up carefully and in accordance with the law and ethical standards so as to avoid claims of patient abandonment that could threaten their professional license or expose them to liability. Are you interested in speaking with one of our attorneys? Click here to contact us now. Dentists Have a Right To Unilaterally Dismiss a Patient For Reasonable Cause As a preliminary matter, dentists may choose to responsibly end their relationship with a patient for any reasonable, legally permissible cause. As the American Dental Association (ADA) guidelines put it: The dentist has the right to dismiss a patient in situations where it is impossible to resolve differences or if the dentist cannot abide the patient’s behavior within the practice, as long as the dismissal is not for a legally impermissible discriminatory reason. Accordingly, a dentist may not end a patient relationship because of the patient’s race, religion, gender, color, age, national origin, disability, or other characteristics protected by federal and state anti-discrimination laws. Notably, political opinions are not a protected characteristic under the law. Common reasons a dentist may justifiably terminate a patient include: Hostility or abusive behavior toward the dentist, staff, or other patients Harassment or sexual abuse of dentist, staff, or other patients Repeatedly missing appointments Refusal to undergo recommended testing or treatment Lack of trust or confidence in the dentist’s abilities or recommendations Consistent failure to follow office policies Showing up to appointments under the influence of alcohol or drugs Refusing to adhere to infection-control precautions and policies, such as masking Nonpayment Patient Dismissal vs. Patient Abandonment A dentist who chooses to dismiss a patient can’t simply show them the door, send them a break-up text, or refuse to answer their calls. Dentists must end the relationship such that they avoid any claim that they have abandoned their patient. According to the ADA’s Principles of Ethics and Code of Professional Conduct Section 2.F.: Once a dentist has undertaken a course of treatment, the dentist should not discontinue that treatment without giving the patient adequate notice and the opportunity to obtain the services of another dentist. Care should be taken that the patient’s oral health is not jeopardized in the process. Patient abandonment is a serious ethical violation. For example, the Illinois Dental Practice Act lists “abandonment of a patient” as one of the many reasons the Illinois Department of Financial and Professional Regulation may revoke, suspend, refuse to issue or renew, reprimand, or take other disciplinary or non-disciplinary action against a dentist. A dentist also exposes themself to a malpractice claim if injuries result from their termination of the patient at the wrong time during the course of treatment or without proper notice. Best Practices For Terminating a Patient Relationship As noted, adequate notice, providing the patient an opportunity to find alternative care, and facilitating continuity of ongoing care are the keys to responsibly ending the dentist-patient relationship and avoiding a claim of abandonment. We suggest that dentists take the following steps to minimize the likelihood of any disputes or claims arising from the termination of the relationship: provide written notice to the patient, preferably by certified mail; provide the patient with the reasons for terminating the relationship; offer to continue treatment and access to services for a reasonable period (such as 30 days) to allow the patient to secure another dentist’s services; state that you will provide emergency services for a designated period; help the patient locate another dentist; and offer to transfer the patient’s records to a new dentist and/or advise the patient of their right to obtain a copy of their records for a fee. Additionally, a dentist experiencing issues with a patient should contemporaneously document all communications, incidents, statements, or behavior suggesting a breakdown in the relationship. Of course, while a dentist can control how they handle the end of a patient relationship, they can’t control how the patient will react to being “dumped.” Even when the dentist acts professionally and cordially, as they should, there is no guarantee that the patient will do the same. If a patient responds with hostility or anger, tread carefully and do not respond in kind. Contact Us With Any Questions or Concerns If you have any questions or concerns about ending a patient relationship, please give us a call. At Grogan, Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Please call us at (630) 833-5533 or contact us online to arrange for your free initial consultation. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices, and this blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.
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