Key things PE firms look for when buying a dental office

Yaopeng Zhou
Jul 15
2 min read

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