Deal Teardown: $2.5M GP Practice, $600K EBITDA, Three Offers
Three buyers indicated between 5.8x and 6.5x on a practice whose owner had asked 7x, and the seller chose the lowest headline number because it was the only offer that matched what she actually wanted. This teardown is fictionalized and illustrative.
The practice and the seller
General dentistry, $2.5M collections, $600K normalized EBITDA, six operatories, owner produces 48%, two part-time associates. Hygiene is 29% of collections. Owner is 52, wants to keep practicing at least five years, wants her long-tenured staff protected, and does not want to give up control of labs and materials.
Asked
Her CPA had said "DSOs pay 7x." She listed at $4.2M.
The three indications
| Line | Regional DSO | National platform | Dentist-owned group |
|---|---|---|---|
| Multiple | 6.1x | 6.5x | 5.8x |
| Enterprise value | $3,660,000 | $3,900,000 | $3,480,000 |
| Cash at closing | $2,928,000 (80%) | $2,535,000 (65%) | $3,306,000 (95%) |
| Rollover | $732,000 in regional holdco | $1,365,000 in national holdco | $174,000 in the practice entity itself, with distributions |
| Earn-out | None | None | None |
| Doctor compensation | 31% of collections | 30% of collections | 32% of collections |
| Employment | 3 years | 5 years | 2 years minimum, open-ended |
| Labs and materials | Centralized within 12 months | Centralized at closing | Doctor's choice |
| Staff | Retained; benefits move to DSO plan at 90 days | Retained; centralized HR at closing | Retained on current terms |
| Branding | Preserved 24 months, then co-branded | Rebranded at closing | Preserved |
How the seller reasoned
The national platform's 6.5x was the biggest number and the smallest amount of cash. It also rebranded at closing and centralized labs immediately, the two things she had said she did not want. Her adjusted view of it, after haircutting $1.365M of rollover, was the lowest of the three.
The regional DSO was the middle path on everything.
The dentist-owned group paid 95% cash. Its rollover was in her own practice entity, meaning she kept a small ownership stake in the office she already ran and received distributions from it. It paid the highest compensation and left labs, materials, staff and brand alone. Its headline was $420,000 below the national platform. Its cash at closing was $771,000 above it.
What she chose
The dentist-owned group, at 5.8x.
What this teaches
The asked multiple was a number from a CPA who had not looked at the practice. The indications ranged across three buyer types with three different models, and the "best" one depended entirely on what the seller valued. She valued cash, autonomy and her team. A different owner would have taken the national platform and been right to.
This is also why DentalDex records asked, IOI, LOI and closed multiples separately. In this deal, the asked number was 7x, the winning IOI was 5.8x, and the spread between them was not a failure. It was the market telling the seller what her preferences cost.
Find out which buyer type fits what you actually want.
Run the DSO Compatibility IndexThis teardown is fictionalized. Practices, buyers and figures are constructed to illustrate deal mechanics and do not describe any real transaction. Market ranges on this page are illustrative planning ranges, not offers. Involve qualified legal and tax advisers on any transaction.