A DSO calls. They have looked at your practice, and they quote a number. It is bigger than you expected, and for about a day it feels like the decision is made.
Here is the part most owners learn too late. That number is a total, not a payment. It is the sum of several pieces, and the pieces do not weigh the same. Some of the money is certain. Some of it depends on how the buyer performs years from now. Some of it you might never see. Two offers with the same headline number can be worth very different amounts, and knowing how the split works is what lets you tell them apart.
Most DSO offers are built from three parts. Cash at close is money wired to you on the day the deal is signed, and it is the only piece that is certain. Rollover equity means the buyer keeps part of your sale price and gives you shares in their parent company, so you become a small owner of the DSO itself, and rollover only pays off if the parent company sells again later at a higher value, which is a bet on someone else's business rather than yours. Earnout is money you receive later, if your practice hits agreed targets after closing, usually collections or earnings over the next year or few years.
The percentages vary widely by buyer, by practice size, and by how much competition exists for your deal. Never assume a split is standard. Ask for it in writing, in dollars, before you get attached to the total.
The fourth piece almost nobody counts is your pay after the sale. DSO buyers price a practice off its earnings, so any expense you cut raises the price they will pay, and your own compensation is the largest expense in most endodontic practices. If you agree to work for a lower salary after closing, reported earnings rise and the offer rises with it. That trade can be fine. It can also be a way of paying yourself with your own money. Run it out over the full length of the employment agreement. If the offer goes up by a certain amount and your pay drops by more than that across the years you are committed to stay, the deal got worse while the headline number got better.
Three questions worth asking in writing. What salary or percentage of collections will I be paid after closing, and for how many years? Who sets the practice budget after closing, since spending decisions affect my earnout? What happens to my earnout if the buyer adds staff, changes fee schedules, or renegotiates my insurance contracts?
Buyers are pricing risk, and in a specialty practice risk shows up in a few specific places. Referral concentration comes first, because your revenue comes from general dentists who send cases, and if a large share of your production traces back to a small number of referring offices, a buyer sees a practice that could lose serious revenue if one relationship ends. Doctor dependency is next: if the cases come to you because of you, the buyer is not purchasing a business, they are renting a person, which is why employment agreements and non compete terms are usually tied to the money.
Clean earnings matter too. A buyer will rebuild your profit and loss statement their way, stripping out personal expenses, one time costs, and anything that will not continue after the sale. If your books are messy, they do that math themselves, and their version tends to favor them. Collections quality is the fourth, since production is a promise and collections is money, and a practice with a widening gap between the two gets discounted. The gap is usually a front desk process problem rather than a dentistry problem. The fifth is the trend line. Flat or falling production gets priced off past results with no credit for potential, while a clear upward trend gives you room to argue for what comes next.
Practice owners in this region sit inside one of the denser dental markets in the country, which is generally good news for a seller. More buyers competing for a practice tends to improve terms, and terms are where the money hides. State rules change what you keep. A Maryland seller and a Virginia seller can sign identical deals and end up with different amounts after tax, because Maryland added a surtax on capital gains for higher income filers starting with the 2025 tax year. If your practice is in DC, or you live in one state and practice in another, the state your gain is taxed in is a question to settle long before a letter of intent rather than during it. We work with practice owners in Virginia, Maryland, and Washington DC, which means three sets of state rules on one set of books.
Consolidation is not slowing down. The American Dental Association's Health Policy Institute reported that in 2024, more than one in four dentists within ten years of dental school were affiliated with a DSO. The buyers are getting more experienced at these negotiations every year. Most sellers do this once. The gap in experience is real, and the way to close it is preparation. Know your earnings number the way a buyer will calculate it. Know where your referral concentration sits. Know what your practice is worth before anyone quotes you a figure, so the first number in the room is not the only number in the room.
Our free benchmark call covers your earnings, overhead, and valuation range, measured against endodontic practices rather than general dentistry. You leave knowing what a buyer would see, whether or not you plan to sell.
Sources: ADA News, HPI: More new dentists affiliated with DSOs, reporting ADA Health Policy Institute data (adanews.ada.org).