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A DSO Just Called. Here Is How to Read the Offer Before You Answer.

DSO offers are structured to sound bigger than they are. The headline number is rarely the number you keep. Here is what to look at first.

When a DSO calls, the number they lead with is designed to get your attention, not to tell you what the deal is worth to you. Before you respond, it helps to know how these offers are actually built.

Most DSO deals price off EBITDA, not gross revenue. That means the first thing that matters is how your earnings are calculated: what add-backs they credit, how they treat your compensation, and what they call a one-time expense. Two offers at the same multiple can be worth very different amounts depending on the earnings base.

Then look at the structure of the money. A large share is often equity in the DSO or an earnout tied to future performance, not cash at close. Cash you keep and paper you might keep are not the same thing, and they carry very different risk.

Post-sale, most deals require you to keep working for a period at a set compensation. That number, and how long you are locked in, is part of the price. A high headline with a low post-sale salary can be worse than a lower headline with better terms.

The owners who do well here are the ones who knew their own number first. If you have a clean valuation and a true EBITDA before the call, you can read the offer against reality instead of against the DSO's framing.

The worst move is to negotiate live off their anchor. Have the offer read against your own numbers before you say anything beyond thank you.

Key takeaways
  • Most DSO deals price off EBITDA, so how your earnings are calculated matters more than the headline multiple.
  • A large share is often equity or earnout, not cash at close, and carries different risk.
  • The post-sale employment term and pay are part of the real price. Know your own number before you respond.
Do DSOs pay based on revenue or profit?
Almost always EBITDA, so how your earnings are calculated matters more than the headline multiple.
Is the offer all cash?
Rarely. Expect a mix of cash, equity, and earnouts, plus a post-sale employment term that is part of the real price.
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EBITDA: The Number a Buyer Uses That You Probably Never Track
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