Why Selling To A DSO Still Makes Sense For Many Dentists- Even Amid Financial Turbulance

Author: Darren Sardoff, President & Chief Investment Officer

The headlines are hard to ignore: Dental Service Organizations (DSOs) are facing growing financial pressure. Rising interest rates, labor shortages, and insurance-driven revenue constraints have created a more complex environment. However, despite recent turbulence, selling your dental practice to a DSO can still be a smart and strategic decision for the right seller, under the right conditions.

Here’s why a DSO sale may still be a winning move, and how to do it wisely.

1. Liquidity and Retirement Opportunities

For many dentists nearing retirement, a DSO sale still offers one key benefit that’s hard to beat: immediate liquidity.

• DSOs, even those facing challenges, often still have the capital to make competitive offers.

• Many offer 60–80% of the purchase price upfront, allowing owners to unlock the equity in their practice without waiting years.

• For dentists without a clear successor or associate buyer, a DSO may be the only viable path to retirement.

In a consolidating market, taking chips off the table now can be safer than waiting and hoping for higher valuations later.

2. Less Operational Burden, More Clinical Focus

Owning a practice is increasingly demanding, and regulatory compliance, hiring, billing, and IT headaches can take a toll.

DSOs relieve that burden:

• They handle HR, marketing, insurance credentialing, payroll, and purchasing.

• You focus on clinical care, not back-office administration.

• For younger dentists who aren’t ready to retire but are tired of running a business, this model can offer the best of both worlds.

Even in a shaky financial environment, many DSOs continue to offer a strong infrastructure that solo practices can’t easily replicate.

3. Economies of Scale Still Work in the Right Hands

Not all DSOs are the same. Well-managed, mid-sized, or regionally focused DSOs remain profitable, sustainable, and continue to expand smartly. These organizations:

• Operate with leaner overhead and better clinical integration.

• Have stable or growing access to capital due to conservative growth strategies.

• Offer structured transition models that preserve patient care and staff continuity.

Choosing the right DSO partner, rather than simply the one offering the biggest check, remains crucial.

4. Tax and Market Timing Advantages

Selling now can still provide strategic advantages:

• While unlikely, capital gains tax rates may rise in the future; locking in today's rates can maximize net proceeds.

• Private equity interest is still strong in healthcare, especially for DSOs that show profitability and resilience.

• The market for practice sales is still competitive, especially in areas with population growth, strong insurance coverage, and provider shortages.

If you wait too long, you may face a buyer’s market where terms become less favorable.

5. Earn-Outs and Equity Can Still Be Upside Plays— If You’re Selective

Many DSOs offer equity or earn-out structures to align long-term incentives. While risky, they can be lucrative if you partner with a stable, growth-oriented DSO.

• Equity in a high-performing DSO can result in a second “payday” if the organization is acquired, recapitalized, or goes public.

• Earn-outs can reward ongoing production and retention if you plan to stay on for a few years.

The key: don’t treat these as guaranteed. View them as bonuses, not baseline value, and negotiate from that mindset.

How to Sell Smart in Today’s Market

If you’re considering a DSO sale in 2025, protect yourself with a few critical steps:

• Hire a dental transition advisor and an attorney, and a CPA with DSO experience.

• Ask detailed questions about the DSO’s financial backing, leadership, and long-term plans.

• Structure your deal to maximize upfront value and minimize risk.

• Understand your post-sale role—are you expected to stay on? For how long? Under what terms?

The Bottom Line

Yes, the DSO landscape is shifting—but that doesn’t mean it’s collapsing. This market correction could create better alignment between DSOs and dentists, with smarter deals and more sustainable partnerships.

If you approach the sale thoughtfully, with the right team and strategy, selling to a DSO can still be one of the best decisions of your career.

About King’s Ransom Group

King’s Ransom Group (“KRG”) is a private investment firm and M&A advisor, working with companies across the business services, healthcare, and marketing industries. KRG’s healthcare group advises dental practices nationwide in all facets of their sales process to help practices find the best and right investors and partners. KRG’s team has decades of experience founding and operating businesses across various sectors as well as financial expertise, having worked at some of the largest firms on Wall Street. For more information, please visit: www.kingsransomgroup.com.

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