Selling a dental practice to a dental support organization (DSO) is a different process than selling to a single office, and treating it as though it were can cost you a great deal. The complexity grows when multiple locations are involved: more staff, more lease agreements, more revenue streams, and a DSO buyer conducting thorough due diligence across every one of them. Understanding those differences before you get to the negotiating table is not just helpful; it is essential.
At Mandelbaum Barrett PC, our National Dental Law Group has guided dentists through dozens of DSO transactions, including multi-location acquisitions involving buyers with large national footprints. We understand what DSOs are looking for, where sellers get surprised, and how to protect your interests at every stage of the deal.
What DSOs Are Actually Buying in a Multi-Location Deal
When a DSO acquires a single practice, the transaction is fairly contained. There is one set of books, one lease, one team, and one dentist whose production history drives the valuation. The buyer’s due diligence is thorough but manageable.
A multi-location acquisition is a different kind of transaction entirely. DSOs acquiring a group of practices are not just buying patient lists and equipment. They are buying infrastructure, operational systems, and scalable revenue. According to the ADA Health Policy Institute, DSO affiliation among U.S. dentists rose from 8.8% in 2017 to 13% in 2022, reflecting how aggressively DSOs have pursued group acquisitions as a core growth strategy.
What Gets Scrutinized Differently
Because DSOs acquiring multiple locations are often looking for a “platform,” meaning a foundation for further regional expansion, they look at the portfolio as a whole. They examine how consistently each location performs, which offices are underperforming, and whether the group’s operations can be standardized and scaled. Sellers need to be ready for a due diligence process that covers each location’s financials, lease terms, staff contracts, payer mix, and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) contribution, both individually and collectively.
Valuation Works Differently at Scale
In a single-practice sale, valuation is typically based on a straightforward multiple of collections or EBITDA. With a multi-location group, the calculation shifts.
DSOs may pay a “platform premium” when acquiring a group because they are buying the infrastructure to build from, not just a single revenue-generating office. This premium can translate into meaningfully higher multiples than a solo seller would receive, but it is not automatic. The buyer will assess whether the group’s revenue is concentrated in one location, whether any offices carry too much risk, and whether the combined EBITDA justifies the price they are considering. Understanding how the DSO transaction process works across all four phases — from LOI through closing — helps sellers anticipate what is coming and negotiate from a position of strength.
How Equity Components Change the Equation
Multi-location deals often include an equity rollover component, meaning the seller keeps a percentage stake in the DSO or its affiliated entity after closing. This structure is far less common in single-practice sales. Understanding that rollover equity ties your financial future to the DSO’s performance, and reviewing the terms under which you can exit, are critical parts of navigating the transaction before you sign anything.
Legal Complexity Compounds With Each Location
A single-practice sale involves one asset purchase agreement, one lease assignment or negotiation, and one employment or transition agreement for the selling dentist. In a multi-location deal, every one of those elements multiplies.
Each practice location may have a different landlord, a different lease structure with different assignment provisions, and a different set of employees with varying compensation arrangements. Non-compete agreements must be carefully negotiated for each dentist involved. Regulatory considerations, including state corporate practice of dentistry rules that govern how DSOs may operate, can vary even within the same state, depending on how each practice is structured. Before any of those complexities arise, sellers should also understand how to approach the letter of intent in a large-scale dental M&A transaction, where early decisions can limit leverage throughout the rest of the deal.
Representations, Warranties, and Indemnification
DSO buyers in multi-location transactions typically require broader representations and warranties from sellers because the risk surface is larger. If a compliance issue surfaces at one location after closing, the seller could be liable.
Working with experienced dental legal counsel to limit that exposure through proper representations and warranties insurance, negotiated indemnification caps, and pre-closing compliance remediation can protect you in ways a solo-practice seller rarely needs to consider. Our team has seen what happens when dental deals fall apart, and we work hard to make sure our clients avoid those outcomes.
Preparing a Multi-Location Group for Sale
Preparation for a multi-location DSO sale typically takes longer and requires more coordination than a single-practice exit. Sellers should make sure that financial statements for each location are clean and independently verifiable, that all leases are reviewed and assignable, and that employment arrangements are documented and compliant. Our team has written extensively on what dentists need to know before doing a deal with a DSO.
Buyers will also look closely at patient retention data, payer mix across locations, and whether any single dentist accounts for a large share of revenue in a way that creates transition risk. Identifying and fixing those vulnerabilities before the deal process begins puts sellers in a stronger position at the negotiating table. Our attorneys have written in detail about the pitfalls to avoid when buying or selling a dental practice, many of which apply with even greater force in multi-location deals.
Contact Mandelbaum Barrett PC to Discuss Your DSO Transaction
Our National Dental Law Group has closed DSO transactions across the country, representing sellers in complex multi-location deals as well as individual practice transitions. Our team has direct, hands-on experience with the issues outlined here, from due diligence to equity rollovers to lease negotiations. We know what DSO buyers are looking for, and we know how to make sure our clients are protected.
Whether you are just beginning to explore a sale or already in conversations with a buyer, having the right legal team in your corner can change the outcome. Contact us today to speak with our team and get the guidance you need.