Key Takeaways

• DSOs value practices using EBITDA multiples, not collections.
• A higher headline price often includes earn-outs and multi-year commitments.
• Responding to unsolicited offers can significantly reduce leverage.
• EBITDA calculations are frequently adjusted in ways that favor the buyer.
• Exploring multiple offers creates optionality and protects long-term value.

Dental Service Organizations (DSOs) continue to expand rapidly, and many dental practice owners are receiving calls offering valuations far above what traditional peer-to-peer sales have historically delivered. While those offers can be tempting, a recent episode of Beyond Bitewings makes one thing clear: selling to a DSO is not a simple transaction, and without preparation, owners can leave substantial value on the table.

The episode features insights from Todd Wilson, formerly of Star Dental Partners, along with perspectives from Brannon Moncrief, of McLerran & Associates Practice Transitions, and Robert and Ash from the Edwards & Associates team. Rather than focusing on any one deal, the conversation centers on how DSOs think about value, risk, and control, and why that perspective differs so dramatically from how dentists often view their own practices.

Why DSOs Can Offer More And What That Really Means

Traditional dental practice sales are often based on a percentage of trailing collections. DSOs, however, value practices using a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization). Depending on the practice, those multiples can range from three to well over ten.

That difference explains why DSO offers can appear dramatically higher than independent buyer offers. Private equity groups backing DSOs are targeting a predictable return, often around 12 to 13 percent, and they structure deals mathematically to achieve that outcome. The higher price isn’t generosity; it’s engineering.

EBITDA Is the Battleground

One of the most important takeaways from the discussion is that EBITDA is rarely a fixed number. DSOs frequently adjust EBITDA calculations by excluding add-backs, questioning discretionary expenses, or allocating costs in ways that reduce the final figure.

Even small adjustments can have outsized consequences. A $50,000 change in EBITDA, when multiplied by seven, can reduce a sale price by $350,000. Larger practices can see swings in the millions. This is why controlling the EBITDA narrative and understanding how it’s calculated is critical before accepting any offer.

What Happens After the Sale

Another major difference between selling to a DSO and selling to an independent buyer is the post-sale commitment. In a peer-to-peer transaction, sellers typically transition out within a few months. With DSOs, sellers are often required to stay on as associate doctors for three to five years.

In many cases, only a portion of the sale price is paid upfront, with the remainder tied to earn-outs over time. Leaving early can mean forfeiting a significant share of the promised value. While ongoing compensation continues, these structures fundamentally change the seller’s role, autonomy, and risk profile.

The Risk of Saying Yes Too Soon

A recurring theme throughout the episode is the danger of responding to unsolicited offers without representation. DSOs are designed to create proprietary deal flow, often engaging owners in “informal” conversations that quickly turn into binding negotiations.

Without exploring multiple buyers and deal structures, owners lose leverage. Creating optionality, by understanding motivations, comparing offers, and aligning the deal with personal and professional goals, can dramatically improve outcomes. The right deal isn’t just about price; it’s about structure, timing, and long-term fit.

A More Strategic Way Forward

DSOs are not going away. For some dental practices, they can be an excellent partner. But the episode underscores that preparation matters. Understanding valuation mechanics, earn-outs, lease considerations, and post-sale expectations gives owners control over decisions that can shape their financial future.

The bottom line: selling to a DSO should be a strategic choice, not a reactive one.