DSO acquisition offers are still coming — here's how to actually evaluate one

Dental support organization acquisition and affiliation activity has continued at a steady pace, and independent practice owners — particularly those nearing retirement or looking to de-risk — continue to field inbound interest. The headline valuation multiple gets the most attention in these conversations, but it’s rarely the number that determines whether an affiliation actually works out well for the owner.

What the multiple doesn’t tell you

A purchase price expressed as a multiple of EBITDA is only comparable across offers once you know what’s actually included — whether the owner is expected to keep working post-sale (and for how long, at what compensation), what happens to existing staff, and how much of the payout is upfront cash versus earnout tied to future performance the owner may no longer fully control.

The autonomy trade-off

Full DSO acquisition typically means giving up control over major decisions — staffing, equipment purchases, even clinical protocols in some structures — in exchange for purchasing scale, administrative support, and liquidity. Lighter management-services arrangements preserve more autonomy but deliver less of the financial upside. Owners generally find the right structure depends more on how much control they’re willing to trade than on which option pays the highest headline number.

Earnouts deserve more scrutiny than they usually get

Earnout structures that pay out additional consideration based on the practice hitting performance targets after the sale put real risk back on the seller if the DSO’s operational changes — different supply vendors, new scheduling software, staffing adjustments — affect performance during the earnout period. Sellers who don’t negotiate some control over operational decisions during the earnout window are accepting risk on a number that’s nominally already “sold.”

Questions worth asking before signing anything

What specifically happens to existing staff, what decisions the owner retains versus loses, how the earnout is calculated and who controls the inputs to it, and what the actual day-to-day looks like for the owner post-close are the questions that determine whether an affiliation is a good outcome — not the multiple on the term sheet.

Bottom line: DSO offers are still flowing, and the multiple is the easiest number to compare and the least useful one for deciding whether an offer is actually good. Run the autonomy, earnout structure, and post-close role questions before the price.