How to Sell a Dental Practice

What buyers look for in a dental practice

Dental practice acquirers — which include DSOs (Dental Service Organizations), regional consolidators, and individual dentists — screen for a consistent set of criteria before expressing interest:

• Hygiene production ratio: Hygiene should ideally contribute 25–35% of total practice revenue. Practices below 20% raise questions about recall systems and patient retention.
• Payer composition: Buyers want fee-for-service or PPO-dominant revenue. Heavy Medicaid or HMO dependence compresses multiples significantly.
• Associate readiness: A practice where the selling dentist is the sole producer is riskier. Buyers pay more for practices with associates already in place or where patient relationships are distributed.
• Patient recall rate: 85%+ recall rates signal a healthy, sticky patient base.
• Lease terms: Buyers want at least 5–7 years remaining on the lease, preferably with renewal options. Short-term leases create risk.
• Equipment age: Major equipment under 10 years old. Digital X-rays, Cerec, and cone beam CT are positive signals.

How dental practices are valued

Dental practices are valued primarily on EBITDA (earnings before interest, taxes, depreciation, and amortization) with an applied multiple.

• Solo general practice: 4–6x adjusted EBITDA
• Multi-location practice: 5–7x adjusted EBITDA
• Specialty (ortho, oral surgery, perio): 4–8x depending on specialty and location

The EBITDA number is adjusted: owner's salary above market rate, personal expenses run through the business, one-time costs, and discretionary items are added back to get "seller's discretionary earnings" (SDE), which is what buyers actually pay on.

What lowers the multiple:

• High owner-dependence (the selling dentist does 90%+ of production)
• Poor payer mix (Medicaid-heavy)
• Short lease or lease issues
• Equipment that needs replacement immediately

What raises the multiple:

• Strong hygiene production
• Multi-provider setup
• Long-term patient relationships documented in a recall system
• Clean chart and billing records

Should you use a broker to sell your practice

Dental practice brokers typically charge 8–12% of the sale price. On a $2M practice, that's $160K–$240K in commission. The question is whether the broker earns that fee.

When a broker makes sense:

• You have no idea where to find buyers
• You want someone to manage the entire process
• The deal is large enough ($2M+) that 10% is worth the convenience

When to skip the broker:

• You already know your likely buyer pool (a competitor, a DSO that has contacted you, an associate who wants to buy in)
• You want to screen demand privately first before committing to an engagement
• You're still deciding whether to sell at all

The alternative to starting with a broker is checking whether buyer demand exists first — privately and without any public listing. If the demand signal is strong, you can decide how to proceed with that information. If demand is weak, you haven't burned bridges or tipped off your staff.

How to find buyers without a public listing

Listing your practice publicly creates immediate problems: your staff finds out, your patients worry, suppliers tighten terms. Most dental practice sales that go smoothly stay private until a buyer is nearly signed.

Sources of private buyers:

• DSOs: Large DSOs have dedicated acquisition teams actively looking. They don't need you to list publicly — they're already searching by geography and production volume.
• Competitor dentists: Practice owners in adjacent markets are natural buyers for geographic expansion.
• Associates: An associate who knows the practice and the patient base is often the cleanest buyer, though usually not the highest price.
• Search fund dentists: Individual buyers who have raised a fund specifically to acquire one practice and operate it as their career.

The key is screening these buyers before they know you're selling. A private buyer-fit check — where you describe your practice profile confidentially and see who is actively looking — gives you a demand signal without the risk of a public listing.

What the first conversation with a buyer actually covers

The first call with a buyer is not a negotiation. It is a mutual fit check. Both sides are trying to answer: is this worth digging into further?

Topics typically covered:

• Practice location and broad market (not specific address yet)
• Revenue range (not exact financials)
• Payer mix and hygiene production at a high level
• Your timeline and transition expectations
• The buyer's acquisition experience and financing

What you do not share in the first call:

• Exact revenue or EBITDA numbers
• Patient count or chart details
• Specific equipment inventory
• Staff names or compensation

A Letter of Intent (LOI) typically comes before any detailed financial disclosure. Until then, keep the first conversations high-level.

Common mistakes dentists make when selling

• Telling staff too early. Nothing disrupts a dental practice faster than staff knowing the owner is considering a sale. Key staff look for other positions. Patients sense instability. Keep the process confidential until a buyer is signed.
• Overpricing based on gross revenue. Buyers pay on EBITDA, not on collections. A $1.5M collection practice with a 10% EBITDA margin is worth less than a $1M practice with a 30% margin.
• Starting with a broker before checking demand. A broker engagement locks you in for 12+ months. Check private demand first before signing.
• Not preparing your records. Buyers want clean P&Ls, 3 years of tax returns, a patient count breakdown, and a lease. Assembling these after a buyer expresses interest creates delays and erodes trust.
• Letting one buyer define the market. The first buyer who reaches out is rarely the best one. Run a process — even a private one — before accepting any offer.