How Can a DSO Write an LOI That a Dentist Will Accept?
A winning dental-practice LOI combines competitive economics with clarity, credibility and terms that address the seller's personal concerns. The highest enterprise value does not always win; DentalDex's teardowns show a 6.5x offer beating a 7x offer and a 5.8x offer beating both, because the losing LOIs answered a question the seller was not asking.
What a dentist reads first
Not the multiple. In roughly this order: how much cash at closing, how long they must work, what they will be paid, what happens to their staff, and whether the buyer sounds like it understands the practice. A two-page LOI that answers those five things plainly beats a ten-page one that buries them.
The economic section
State every component in dollars, on one page, in this order:
| Line | Write it as |
|---|---|
| Enterprise value | "$4,500,000, based on normalized EBITDA of $700,000 (6.4x)" |
| Cash at closing | Dollars and percentage of EV |
| Rollover equity | Dollars, entity, class of units, and the valuation basis |
| Earn-out | Dollars, metric, threshold, measurement period, and whether it is all-or-nothing or sliding |
| Holdback | Dollars, escrow period, what triggers a claim |
| Working capital | Whether a peg applies and how it is calculated |
| Real estate | Lease terms proposed, or purchase price if buying the building |
Always state the EBITDA basis next to the multiple. A seller who has read the DentalDex teardown on retrades knows to ask, and an LOI that volunteers it signals a buyer who does not intend to move the number in diligence.
The employment section
Put it in the LOI, not in a term sheet that arrives later. Term, compensation formula (collections or adjusted production, and what is deducted), clinical days, benefits, and the non-compete radius and duration. The teardown on doctor compensation shows a $400,000 swing hidden in exactly this section; sellers with representation will find it, and a buyer who disclosed it up front wins credibility.
The autonomy section
One paragraph, specific. Who controls treatment planning, labs, materials, scheduling and hiring; what changes at closing, what changes at 90 days, what does not change. "We respect clinical autonomy" is not a term. "Treatment planning and lab selection remain with the treating dentist; supply procurement moves to our platform at day 90 with a formulary the doctor can add to" is.
The staff section
State it: all employees offered continued employment at current base compensation, benefits transition date, whether the office manager's role changes. Many sellers weight this above price, and the ones who do will not say so until it is too late.
Certainty
A seller values a buyer that can close. Include the diligence timeline in days, the approval steps remaining (committee, lender, board), whether financing is committed, and the conditions to closing. If your IC has not approved the deal, say the LOI is subject to it; sellers forgive contingency, not surprise.
Personalize
If the seller's DentalDex profile or first call emphasized staff retention, lead with the staff section. If they want equity upside, explain the rollover in detail and offer a call with a dentist who rolled with you two years ago. If they said they want to retire in two years, do not send a five-year term without explaining the alternative. The best LOIs read as though they were written for this practice, because they were.
What loses
- A headline multiple with structure "to be determined in definitive documents."
- Employment terms that arrive after the LOI is signed.
- A five-year term sent to a 64-year-old.
- Silence on staff and branding.
- A rollover described as "meaningful upside" with no entity, class or valuation.
- An earn-out on a metric the seller cannot influence after closing.
Checklist before it goes out
- Every dollar of consideration adds up to enterprise value.
- EBITDA basis stated next to the multiple.
- Employment term, formula and non-compete in the document.
- Autonomy and staff commitments in specific language.
- Timeline, approvals and financing status disclosed.
- One sentence that shows you read the practice's package.
DentalDex sellers state their priorities before you write a word; every LOI on the platform is presented to the seller in this same format.
Register as a buyerMarket ranges on this page are illustrative planning ranges, not offers. Involve qualified legal and tax advisers on any transaction.