Key things PE firms look for when buying a dental office

When Private Equity (PE) firms evaluate a dental practice for acquisition, they’re focused on scalable profitability, operational efficiency, and strategic fit. Their goal is to build or grow a Dental Support Organization (DSO) platform that can maximize EBITDA, streamline operations, and eventually exit at a higher multiple.

Here are the key things PE firms look for when buying a dental office:

Top 10 Things PE Looks for in a Dental Practice

1. Strong Financial Performance

• EBITDA-focused: Not just revenue, but profitability before doctor-owner compensation

• Healthy margins (15–25%+ EBITDA)

• Steady or growing revenue trends

• High hygiene-to-dentist production ratio (~30–40%)

  Ideal: $1M–$3M annual collections, $300K+ in EBITDA

2. Doctor Stability & Transition Willingness

• Owner willing to stay on for 1–3 years post-sale (earnout or retention)

• Strong associate team in place

• Low turnover, especially among clinical staff

3. Consistent, Diversified Patient Base

• Loyal, recurring patients (hygiene program = recurring revenue)

• Mix of FFS, PPO (PE prefers minimal Medicaid exposure)

• No heavy reliance on one source (e.g., school contract or big employer)

4. Operational Efficiency

• Clean books, well-documented financials

• Use of modern practice management software (e.g., Dentrix, Eaglesoft)

• Efficient billing, scheduling, and collections processes

5. Facility and Location Quality

• Well-maintained, modern office

• 4–8+ operatories (room for growth)

• Prime or growth market (urban/suburban areas > rural)

• Long-term, favorable lease (or real estate included in deal)

6. Scalability Potential

• Room to expand hours, add associates/hygienists

• Undercapitalized marketing = opportunity to grow patient base

• Unperformed high-value services (implants, ortho, sedation)

7. Growth Levers Not Yet Maximized

• No membership plan yet

• Weak recall system

• No online booking or digital presence

• Low treatment acceptance — room to optimize

• PE firms want to “buy low, grow fast” — under-optimized practices are attractive if fundamentals are strong.

8. Clean Legal & Compliance History

• No pending lawsuits, insurance fraud, or major HR violations

• Proper credentialing and compliance with OSHA, HIPAA, etc.

9. Platform Fit / Roll-up Synergy

• Fits into their regional footprint or specialty focus (e.g., GP vs. pedo vs. oral surgery)

• Can be easily integrated into an existing DSO structure

• Shared vendor, payer, or referral networks

10. Willingness to Structure Deal (Earnout, Equity Rollover)

• PE often prefers partial upfront + performance-based earnout

• May offer doctor ownership in broader DSO (equity rollover)

• Flexibility = more attractive

What Kind of Multiples Are PE Paying?

• Small, single offices: 3–5x EBITDA

• Larger practices or mini-groups: 6–8x

• High-performing DSOs: 10–15x+ on exit

Summary Table

Criterion	Why It Matters to PE
Strong EBITDA	Maximizes investment return
Owner transition plan	Ensures continuity
Clean operations	Easier integration
Growth levers	Faster ROI post-acquisition
Location + facility	Reduces capex, supports scaling