Deal Review – Acquisition of a Regional Dental Practice Group
Asking Price: $4,800,000
Annual Revenue: $5,500,000
Annual Profit (EBITDA): $1,175,000
Structure: Multi-Entity Operating Model
Locations: 4 Locations Across Two States
Service Model: General Dentistry + Specialty Services
Client Base: Insurance and Fee-for-Service (60/40 split)
Executive Overview
This deal involves a strategic acquisition of a regional dental group comprised of four fully operational clinics. The group serves patients across two adjacent states, with a strong mix of insurance and fee-for-service clients. The practice has been in operation for 18 years and has built a strong regional brand recognized for comprehensive care, extended hours, and a hybrid patient management system using cloud-based practice software.
With a $4.8M asking price and EBITDA of $1.175M, the deal sits at a 4.09x multiple reasonable given the infrastructure, staffing, recurring appointment flow, and ability to scale within the geographic footprint. All locations are fully staffed with associate dentists and hygienists in place, with the owner functioning as a part-time clinician and administrative director.
What distinguishes this deal is the use of a multi-entity structure to isolate each location, combined with a centralized back office, shared EMR, and a forward-thinking associate retention and earn-in equity structure already in place making this business transition-friendly and professionally managed.
Deal Structure and Terms
Asking Price: $4,800,000
EBITDA: $1,175,000
Revenue: $5.5M
Sale Type: Equity or Asset (flexible based on buyer preference)
Entities: Four LLCs (1 per location) + 1 Management Company (centralized billing, HR, marketing)
Employees: 42 total (8 dentists, 12 hygienists, 22 staff)
Lease Structure: All locations leased; assignable with landlord consent
Real Estate Option: Seller will assist buyer in lease negotiation or purchase if desired
Owner Involvement: 3 days/month in clinical work; 10–15 hours/week administrative oversight
Transition Support: Up to 6 months included, renewable consulting at buyer’s discretion
Financing: Seller is open to partial seller note; deal is SBA 7(a) and 504 loan eligible
Buy-In Structure: Existing associates have phantom equity plans (10% combined interest pool vesting annually)
Services Breakdown
The practice offers a full range of general and specialty dental services:
General checkups and cleanings
Endodontics (in-house)
Orthodontics (limited Invisalign and referral partnerships)
Implants and oral surgery
Cosmetic dentistry
Pediatric services (2 locations specialize in peds)
Digital X-rays, same-day crowns (CEREC in 2 offices)
Emergency dental services
Each location averages 25–35 new patients per month, with capacity for more based on extended hours. Average daily appointments per provider range from 12–18 depending on treatment type.
The payer mix is as follows:
PPO Insurance: 58%
Fee-for-Service: 40%
Medicaid: <2% (one location only)
Most patients are retained via annual cleaning plans, recall tracking, and 6-month follow-up calendars.
Financial Overview
The practice’s financials show strong margin retention, supported by disciplined scheduling, high-margin specialty services, and economies of scale from the centralized back office.
Revenue Distribution by Location:
Clinic A: $1.6M
Clinic B: $1.3M
Clinic C: $1.1M
Clinic D: $1.5M
Expense Highlights:
Payroll: $2.3M
Lab & Supplies: $410K
Rent & Utilities: $360K
Insurance, Licenses, Legal: $120K
Marketing: $140K (heavily SEO and referral-based)
Central Admin: $310K (billing, admin, software)
EBITDA Addbacks: Owner comp + one-time buildout costs
The practice utilizes cloud-based EMR (Dentrix Ascend) and has centralized billing, credentialing, and HR housed under the management company. Each entity operates under its own NPI for insurance purposes but shares tech stack and marketing systems.
Operational Systems
Staffing Model:
8 dentists (3 full-time associates, 4 part-time associates, 1 owner)
12 dental hygienists
4 office managers (1 per location)
4 full-time front office staff (scheduling, insurance)
4 floaters (sterilization techs and supply runners)
3 centralized billing coordinators
1 marketing lead
1 part-time HR/admin
Each clinic runs independently on the ground, with standardized SOPs, pricing sheets, and HR policies created and maintained by the management company. Daily huddles, weekly case review meetings, and monthly KPI scorecards are in place.
Technology Stack:
Dentrix Ascend (EMR + scheduling)
RevenueWell (patient communication + recall tracking)
CallRail (phone call analytics and QA)
Google Workspace
SecurePay (merchant services)
Gusto (payroll/HR)
Transition Support
The seller is offering a 6-month post-sale transition that includes:
Introduction to all associate providers
Transfer of HR manuals, treatment plan libraries, and SOPs
Handoff with billing and credentialing team
Joint meetings with landlord and key referral partners
Optional clinical transition if the buyer is a provider
Consulting retainer available post-close for continued support (monthly or project-based)
The existing management team is stable and expected to remain. Several associate dentists are under 2–3 year employment agreements and are in year one of phantom equity vesting, providing additional continuity.
Growth Opportunities
1. Expand to Medicaid or Community Health Plans:
Only one clinic accepts Medicaid. Bringing others into Medicaid networks (where reimbursement rates are viable) could unlock thousands of additional patients annually.
2. In-House Orthodontics or Oral Surgery:
Most ortho and oral surgery is currently referred out. Adding one full-time specialist could lift production by $350K–$500K annually.
3. Add a Fifth Location:
The management infrastructure can support more volume. There is capacity to absorb a new clinic within 15–20 miles of the current footprint without expanding administrative headcount.
4. Corporate Hygiene Membership Plan:
Building a corporate dental wellness program (pre-paid plans for employers without insurance) could tap into new employer accounts and drive high-retention fee-for-service patients.
5. Teledentistry Triage & Remote Consults:
Implementing pre-appointment teledentistry could increase show-up rates, optimize treatment planning, and lower chair time costs.
Risk Factors
1. Associate Turnover Risk:
Dental groups depend heavily on maintaining associate consistency. Non-competes, vesting schedules, and continuing education stipends help, but turnover remains a structural risk.
2. Lease Obligations:
Leases are assignable, but some have CPI-based rent escalations and shared CAM costs. Any renegotiation must be handled early.
3. Reimbursement Compression:
Insurance payers have slowly reduced reimbursements. A move toward fee-for-service helps hedge this, but pricing pressure remains a long-term challenge.
4. Phantom Equity Plan Management:
While associates are not owners yet, the phantom equity vesting will need to be reviewed and restructured under buyer ownership. Retention depends in part on honoring existing incentives.
5. Clinical Capacity Constraints:
Without adding hours or chairs, growth is capped. At least two clinics are approaching full utilization and would require expanded hours or buildout.
Buyer Suitability
DSO (Dental Support Organization): Looking for regional consolidation
Solo Practitioner or Group: Seeking multi-location expansion
Healthcare PE Firm: Wanting a bolt-on platform in dental with operational readiness
Medical/Dental Operator: Able to manage clinical and HR needs
Multi-Unit Owner: Interested in operational roll-up of service-heavy assets
Deal Structure Options
SBA 7(a) and 504 Loans: The practice qualifies based on EBITDA and clean books; real estate (if purchased) can be separated via 504 loan
Seller Note: 10–15% note at 6% interest, 24-month term with balloon
Equity Rollover: Seller open to retaining 10% in a HoldCo for advisory alignment
Earnout: $300K contingent on EBITDA stability for 12 months post-close
Consulting Agreement: Seller available up to 20 hours/month at $350/hr post-transition
Conclusion
This dental group acquisition offers a rare blend of operational structure, recurring patient volume, provider continuity, and brand equity across multiple locations. With real, replicable systems in place and a central back office that could support 1–2 additional locations immediately, it’s a strong candidate for buyers looking to scale through professional service models in the healthcare vertical.
Deal Summary:
EBITDA: $1.175M
Price: $4.8M (4.09x multiple)
Structure: 4 LLCs + 1 management entity
Team: 8 dentists, strong ops team, phantom equity retention
Location Risk: Low (diversified footprint)
Scalability: High (clinic #5 ready)
Transition Risk: Moderate (depending on associate retention and contract transfer)
