Selling To A DSO?
Don't Go At It Alone.

Maximize Your Value When Selling To A DSO

Thinking of Selling To A DSO? Don't go at it alone.

At 1st Med Transitions, we know that Selling to a DSO (Dental Service Organization) without the right expertise and guidance can be a daunting task. There are a number of factors to consider and our DSO Sale Advisors are well aware of the benefits and the pitfalls to avoid. As the List of Dental DSO Companies in the market has grown, so has our relationships with local, regional and national DSO's and Private Equity firms.

When selling to or affiliating with a Dental Service Organization, you have the potential to gain a much larger selling valuation for your practice than in a traditional doctor-to-doctor transaction. We have seen as much as 125% to 300% of yearly collections. However, it is important to keep in mind that there is more to a sale, than just the price. A DSO Dental Group will typically require a seller to continue to work at the practice post sale for a pre-determined amount of time (usually 2 - 5 years). This length of employment commitment will also affect the valuation and how the sales price monies are disbursed to the seller.

If you have a larger practice, there is a good chance you have already received unsolicited offers or been contacted from DSO Dental Groups attempting to negotiate with you directly. We understand this can be tempting, but there is a chance that you will be missing out on more favorable deal terms/structure and a higher overall sales price. Partnering with or selling to a DSO is an enormous decision for a practice owner and not something you should undertake without the proper representation.

When you sell to a DSO with 1st Med, we make sure to walk you through every step of the DSO sales process.

Our DSO Sales Process:

STEP #1  Sales Consultation

This is the first and most important step in the process. We will discus your goals, objectives and timeline for sale and of course, answer any questions you may have. We will asses your current situation and determine if your practice is a good DSO candidate. We'll inform you on what DSOs are looking for and the different deal structures we are actively seeing in the marketplace.

STEP #2 EBITDA Practice Valuation (no cost)

If we think you are a good DSO transition candidate, your transition advisor will request financial's, practice reports and a practice profile to be provided. We will work with you to determine a current EBITDA valuation as this is the main metric DSOs use to value your practice. Many of our industry competitors charge between $7K and $15K for their EBITDA analysis. At 1st Med, we never charge up-front fees and only earn our commission when your practice is sold!

STEP #3 DSO Outreach

We'll package and confidentially present your dental practice in a professional and secure manner to potential DSO buyers. Our goal is to maximize the interest and pool of potential DSO buyers for your dental practice. The more competition we can generate, the higher the potential for sale, preferred deal structure and maximum enterprise value.

STEP #4 Review Offers

One of the most overlooked part of the DSO Sales process is the deal strucure negotiation. We'll assist you in reviewing multiple offers and help determine which is the best fit for you personally and your practice moving forward. Remember, not all offers are created equal and the same goes for DSOs.

STEP #5 Due Diligence

Once you have determined the best deal structure and culture for your practice, we'll accept the LOI and move into Due Diligence. The difference between a closed transaction and a failed one, can many times comes down to the attention to details. DSO Buyers are more sophisticated than independent doctors and the due diligence process is typically more thorough. We will work with the buyer on quality of earnings, detailed practice reports, and sales contract negotiations.

STEP #6 Closing

There are a number of aspects that lead to a successful closing - deal structure, non-competes, escrow, representations and warranties and transitions agreements. We stay on top of every step in the process from the marketing, letter of intent, due-diligence to the purchase & sale agreement and ultimately closing.

If you are considering selling your dental practice to a DSO (Dental Service Organization), or just want to get a sense of what a potential DSO sale would look like for you and your practice, we would be happy to discuss further.

To get started, complete our DSO Sales Consultation Form Here and you can schedule a call with one of our Senior Transition Advisors.