Our Blog - Everything DSO

They don’t need banks to buy your business

Nov 16, 2022 10:43:54 AM / by Everything DSO

In a previous email, I talked a little bit about how your practice would likely be valued in a dentist-to-dentist transaction …

Where the bank’s capacity to loan is the limiting factor in valuation.

So let’s look at the other primary driver of practice value, especially when a DSO is driving the transaction …

Private equity!

You see, DSOs don’t need banks.

They have virtually unlimited capital to buy good practices and are incentivized to do so, as their job is to provide a return to their investors.

So, private equity investors in DSOs look at acquiring a dental practice like tey would look at buying a manufacturing business, or a distribution business … or really any business - as an ongoing enterprise.

The way a DSO with private equity backing would approach valuation of YOUR practice …

Is a Multiple-of-Profit Valuable Model.

It’s too much to into depth in this email …

But the short explanation is that your profit is measured as adjusted EBITDA, or “earnings before interest, taxes, depreciation, and amortization.”

This ultimately is a measure of free cash flow that your business generates.

DSO buyers will pay a multiple of that ultimate number.

So in a DSO buy, its not uncommon to see values of 100-150% of your topline revenue …

As opposed to the 60-80% that a typical dentist-to-dentist sale will see.

See why a DSO is such a great choice?


Everything DSO

Written by Everything DSO

 Stan Kinder

Which of these 4 DSO Strategies is best for YOU and Your Dental Practice?

Discover how current Dental Market Disruptions can mean Massive Profits for you. Everything DSO is here to help level the playing field for you. As an Industry Insider, the advice you get from our involvement will assure you make the best decisions and achieve the most favorable outcome. 

Take our short 30-second assessment to get started with the best DSO Strategy for you and your Dental Practice …

Take the Assessment!

Subscribe to Email Updates

Recent Posts