How DSO Deal Structures Have Changed
For years, selling to a Dental Support Organization meant a fairly simple conversation: a multiple of EBITDA, a check at closing, and a handshake on staying on for a while. That version of the deal is largely gone. Today’s DSO transactions are layered, negotiated instrument by instrument, and increasingly shaped by state regulation as much as by the buyer’s appetite. If you’re weighing an offer — or expect one in the next few years — understanding how the structure itself has evolved matters as much as the headline number.
From a Single Check to a Blended Package
Most DSO deals today are built from several pieces working together rather than one lump-sum payment:
- Cash at close — still the largest share of most deals, but rarely the whole picture anymore.
- Rollover equity — an ownership stake in the DSO platform (or in a joint-venture entity tied to your specific practice) instead of cash. In many current structures, this isn’t optional; it’s baked into the offer.
- Earnouts — additional payments tied to hitting performance targets, typically EBITDA or production, over a period of one to three years after close.
The mix between these pieces — and the order in which they pay out — now does as much to determine your real take-home as the multiple you’re quoted. Two offers with the same headline number can land very differently in your bank account depending on how much of that number is guaranteed cash versus equity you’re betting on, or income you have to earn.
Equity Is Doing More Work
Rollover equity has moved from a nice-to-have to a central design feature. Sellers are increasingly asked to choose between structures that give them a direct stake in their own practice’s future performance versus a stake in the broader platform — each with a different risk and reward profile. A stake tied to your own practice tends to offer more predictability; a stake in the larger platform offers more upside if the platform grows or eventually recapitalizes, but less control over the outcome.
This shift also has tax implications. Proceeds structured as long-term capital gains — as much rollover equity is — are often taxed at meaningfully lower rates than ordinary income, which is one reason buyers lean on equity components rather than simply raising the cash multiple.
Earnouts: More Common, More Contested
Contingent payments tied to future performance are now a standard deal component rather than an exception. They can work well when targets are realistic and clearly defined — but they’re also one of the most frequent sources of disagreement after closing. Vague overhead allocations, added corporate costs that eat into EBITDA, or “cliff” structures where missing a target by a small margin forfeits the entire payment are common friction points. Sellers who don’t scrutinize how an earnout is calculated — not just what it targets — are the ones most likely to be surprised later.
Longer Commitments, Not Just Bigger Checks
Buyers are also asking for more time. Multi-year employment or retention agreements — often five years or more — are becoming a standard expectation rather than a negotiating point, particularly for practices where the seller is central to production or patient relationships. That commitment is worth weighing on its own terms, separate from the financial structure: it shapes your day-to-day life for years after the transaction closes.
Regulation Is Now Part of the Structure Conversation
Deal structures aren’t only shaped by what buyers want to offer — they’re increasingly shaped by what state law allows. A growing number of states are tightening rules around the corporate practice of dentistry, limiting how much operational control a management company can exercise over an affiliated practice, and in some cases adding notice or review requirements before a deal can close. These rules don’t typically change your price, but they do change what a buyer can legally offer and how long the process takes — which is why the same DSO’s structure can look different from state to state.
What This Means If You’re Considering a Sale
The practical takeaway is that “structure literacy” now matters as much as valuation literacy. Before comparing offers — let alone signing a letter of intent — it’s worth understanding exactly how much of a proposed deal is guaranteed versus contingent, what the equity component actually represents, how an earnout is calculated, and what commitments come attached. Two offers that look similar on the surface can carry very different outcomes once you look at how they’re actually built.
If you’re evaluating an offer or want a clearer picture of how a proposed structure compares to current market norms, that’s exactly the kind of side-by-side analysis we help practice owners work through before they commit to anything.