Selling a dental practice to a DSO

Where private equity stands in dentistry in 2026

Dentistry consolidated earlier and faster than any physician specialty. In 2024, 16.1 percent of U.S. dentists were affiliated with a DSO, up from 8.8 percent in 2017. Among dentists within 10 years of dental school, the share is above 25 percent. A DSO, or dental support organization, is the company that private equity actually owns. Because most states allow only a licensed dentist to own a dental practice, the DSO buys the business side, provides management and supplies, and charges the practice a fee, while a dentist holds the clinical entity on paper. The MSO page covers the same structure in medicine.

There are about 130 PE-backed DSOs. The largest include Heartland Dental (backed by KKR), Aspen Dental (Leonard Green and Ares), MB2 Dental, Smile Brands, Sonrava Health (formerly Western Dental), and Dental Care Alliance. Dental was the busiest category in all of healthcare for private equity add-on deals in 2025, with 149 deals according to the Private Equity Stakeholder Project. An add-on is a smaller practice bought and attached to an existing platform, and it usually gets a lower price than the platform did.

That volume tells you two things. There are many buyers for a general practice. And there are very few platform-level prices left, because most sponsors already own a platform. Advisors group dental with dermatology and anesthesia as the saturated categories. The buyers are active, but they are active at add-on multiples with more deferred and contingent consideration than a few years ago. Across physician practice management generally, deal counts fell 18 percent in 2025 and roughly in half in the first six months of 2026, and hold periods for platforms have stretched to 8 to 10 years, which matters for anyone counting on a second bite. The second bite page covers what a long hold does to rollover equity.

What a dental practice is worth to a DSO

A DSO prices your practice as a multiple of EBITDA. EBITDA is your yearly profit before interest, taxes, depreciation, and amortization, after paying every dentist, including you, a market associate rate. That last adjustment is where most dentists are surprised. If you collect $1.5 million and take home $500,000, the DSO does not see $500,000 of profit. It subtracts what it would pay an associate to produce your dentistry and calls the rest EBITDA. The scrape page walks through the arithmetic.

These ranges come from FOCUS Investment Banking's November 2025 review and other sell-side trackers and are indicative, not offers. Platforms generally clear 3 to 5 turns above add-ons across healthcare, where a turn is one multiple of EBITDA, and that gap is the DSO's business model.

The strongest general practices have several producing dentists, so the practice does not depend on one set of hands, and a full hygiene schedule, because hygiene production recurs without the dentist and buyers count on it. Modern equipment helps, including digital imaging and CAD/CAM, since the buyer avoids capital spending. Fee-for-service or strong PPO mix helps compared with heavy Medicaid dependence. A lease with years remaining and room to add operatories helps too. Specialty practices are priced differently. Oral surgery brings implant and anesthesia revenue that buyers like. Orthodontics has contracts in progress that the buyer must underwrite. Endodontics and periodontics depend on referrals from general dentists, which are personal relationships a buyer cannot own, so multiples there lean lower unless the practice is part of a specialty DSO's growth plan.

Prices fall for a solo practice where the owner produces most of the dentistry, for aging equipment and few operatories, for a heavy Medicaid mix in a state with low rates, for owner add-backs the quality of earnings review will not accept, and for a related-party lease at above-market rent.

The deal terms dentists typically see

The baseline is about 70 percent cash at closing and 30 percent rollover, with 60 to 70 percent cash and 30 to 40 percent rollover the common range. Rollover equity is the portion of your price you take as shares in the DSO's parent company instead of cash. In 2025 and 2026, buyers have pushed more of the price into rollover, earnouts, holdbacks, and seller notes. Some DSOs offer rollover in the local practice entity rather than the parent, which pays out differently and is harder to value. The rollover equity page covers the waterfall and why those shares can be worth nothing.

After closing you become an associate. You are paid a percentage of your production or collections rather than keeping the profit, and the DSO takes the difference. In physician deals that share is typically 20 to 30 percent of practice profits according to the Commonwealth Fund's April 2026 report, and the dental model works the same way. Hygiene revenue, which was yours as an owner, generally becomes the DSO's. Your upfront check is largely a multiple of that forgone income, taxed mostly at capital gains rates, which is the trade you are making.

Associate agreements run at least three years with a clawback of part of the lump sum if you leave early, and five-year terms are common. Non-competes are universal, and the sale-of-business carve-out survives even in states that limit employment non-competes. Ancillaries at risk are hygiene, any in-house lab, and specialty procedures the DSO may route to its own specialists. Ask specifically what happens to implant, sedation, and orthodontic revenue if you currently do those procedures yourself. The glossary defines the terms you will see in the letter of intent.

Tax issues specific to dentistry

The tax pillar covers the general rules for a practice sale. Dentistry has more ordinary income hiding in the price than most physician specialties because the equipment is so much of the practice.

Chairs, imaging, and CAD/CAM

Dental chairs and delivery units, CBCT and panoramic imaging, intraoral scanners, CAD/CAM mills, lasers, and sterilization equipment were probably written off under bonus depreciation or Section 179. Gain on each item up to the depreciation you took is ordinary income under Section 1245 at up to 37 percent federal, not the 20 percent capital gains rate. Section 453(i) requires that recapture in the year of sale even if part of the price is paid later. Bonus depreciation is now permanent at 100 percent for property acquired after January 19, 2025, and the Section 179 limit is $2.5 million, so a recently equipped office is fully exposed. California never conformed to bonus depreciation and caps Section 179 at $25,000, so your California depreciation schedule and California recapture will differ from the federal numbers.

The building you own

Dentists own their real estate more often than physicians do. The DSO usually does not want it. You keep it in its separate entity and lease it to the DSO. That keeps the building's depreciation recapture out of the practice sale and gives you a stream of rent, but the lease terms are now part of the deal. Rent above market reduces the EBITDA the buyer is pricing, so a buyer may ask you to lower rent in exchange for a higher practice price. The trade has tax consequences, because rent is ordinary income each year while the practice price is mostly capital gain once.

Personal goodwill and the Howard trap

Dentistry gave the tax world its cautionary personal goodwill case. In Howard v. United States (E.D. Wash. 2010, affirmed 9th Cir. 2011), a dentist tried to sell his goodwill personally, which would have been long-term capital gain to him and would have avoided a second layer of tax in his C corporation. He had signed an employment agreement and a covenant not to compete with his own professional corporation. The court held the goodwill belonged to the corporation, so the payment was taxed as a corporate asset sale followed by a dividend. If you have no such agreement binding you to your own corporation, personal goodwill can be a real tool, especially in a C corporation. Check your documents before the letter of intent.

Orthodontic contracts and supplies

Orthodontic practices have patients partway through treatment with payments still coming. Depending on how the contract treats those receivables, the money may be ordinary income to you as collected or may transfer to the buyer as part of the price. Dental supplies and inventory are Class IV on Form 8594 and are ordinary income. The F-reorganization page explains how most S corporation dental sales are structured so you get capital gain on the cash and deferral on the rollover.

The non-compete allocation

Every dollar allocated to your covenant not to compete is ordinary income to you at up to 37 percent, while the buyer deducts it over 15 years either way. Moving $2 million from goodwill to the non-compete costs roughly $300,000 or more in additional federal tax for the same headline price.

Reimbursement and regulatory headwinds to price in

Dentistry's reimbursement exposure runs through PPO fee schedules and, for pediatric and public-health oriented practices, Medicaid. A DSO negotiates payer contracts at scale, which is part of its pitch, but the buyer will underwrite your practice at the rates it expects, not the rates you had. If a large share of your production is on a few PPO plans, expect the quality of earnings review to test those contracts.

The regulatory shift is more specific. California's SB 351, effective January 1, 2026, applies to dental practices as well as physician practices. It bars private equity groups and hedge funds from interfering with clinical judgment, including diagnostic decisions, scheduling, and hiring based on clinical competency, and it voids non-compete and non-disparagement clauses inside management contracts, while traditional sale-of-business non-competes remain valid. Texas SB 1318, effective September 1, 2025, was extended to dentists and caps employment non-competes at one year and five miles with a buyout limited to one year's salary. Fourteen states now require advance notice of healthcare transactions, and Oregon's SB 951, effective January 1, 2026, is the most restrictive management company law in the country. The FTC dropped its national non-compete rule on September 5, 2025 and formed a Healthcare Task Force on March 20, 2026. The Texas page and the California page cover the state tax and notice rules in those two states.

Who should not sell right now

• A dentist within 10 years of school with a growing practice. You would give up the owner's share of profit and all of your hygiene revenue for decades in exchange for one payment at an add-on multiple, then wait 8 to 10 years for a second bite that is smaller and later than it was for sellers a decade ago.
• A solo dentist whose production is most of the practice. The quality of earnings review will subtract your associate pay and leave little EBITDA, so the offer will be small and the associate agreement will bind you for years.
• A specialist whose referrals are personal. Endodontists and periodontists in particular are being asked to sell relationships a DSO cannot own, and the non-compete will keep you from rebuilding them.
• Anyone with a single unsolicited offer heavy on earnout and rollover. With about 130 DSOs buying, a one-buyer process leaves money and structure on the table. The should I sell page explains how to run a process instead.

If you already sold and the associate model is not what you expected, the already sold page covers your options.

What to do next

1. Calculate your EBITDA the way the DSO will

   Subtract a market associate rate for your own production from your profit and see what is left. That number times 4.5 to 8 is the realistic range for an add-on offer.

2. Pull your depreciation schedule and your corporate documents

   Know how much Section 1245 recapture sits in your chairs, imaging, and CAD/CAM, and confirm whether you have an employment agreement or non-compete with your own corporation that would block a personal goodwill sale.

3. Decide the lease before the price

   If you own the building, set market rent and a lease term you can live with before you negotiate the practice price, because the buyer will use one to trade against the other.

4. Model the after-tax cash and compare

   Run the after-tax proceeds calculator with your equipment, rollover share, and state, then compare dental to the physician specialties on the specialties hub. The allocation and the associate agreement can still change until the letter of intent is signed.