The Best Time to Sell Your Dental Clinic Is While You’re Still Practicing
What if the best financial decision you could make for your practice is to sell it while you’re still practicing?
Many dentists assume the best financial move is to keep owning their practice until the day they stop working. With present-day market valuations, that assumption doesn’t hold. Selling earlier and continuing to practice can leave you with more money, less risk, and more choice about what comes next.
The owner vs clinician
One of the objections we hear most often is: “Why would I sell now when I still want to practice for five more years?”
It’s a logical reaction, but it ignores an important consideration: every practicing owner wears two hats. You’re a clinician who treats patients, and you’re an owner who manages a team, negotiates with suppliers, and carries the risk of the clinic.
When you sell, you’re selling the owner’s hat. The dentist keeps working. In fact, providing a transition of three or more years is what maximizes the money you put in your pocket.
The question you should be asking is: “If I sell my practice at today’s valuation and invest the proceeds in a diversified portfolio, how does the total return on that money compare with the profit I would make by continuing to own and operate the practice?”
In other words, keeping your practice is also an investment decision. You’re choosing to keep a significant amount of your wealth invested in one business (your clinic), rather than realizing its value in the market and putting that capital to work elsewhere while diversifying and reducing concentration risk.
Years of profit, paid up front
Buyers value practices on a multiple of normalized EBITDA. That’s the profit your practice generates after paying a dentist a fair wage for their clinical work and adding back expenses other owners wouldn’t incur. Calculating EBITDA is like examining bitewings. If you ask 10 dentists to examine the same bitewing, you will likely get 10 different assessments. If you ask 10 finance people to calculate EBITDA, you’ll get 10 different numbers.
Because every dollar of EBITDA is multiplied at sale, small differences in how it’s calculated can add up to hundreds of thousands of dollars. Our team works through your financials before going to market, so your EBITDA is calculated accurately and fully supported when buyers review it.
Say your practice produces $600,000 in normalized EBITDA and sells at 7x, with 90% cash paid at closing. That’s $3.8 million, or roughly six years of ownership profit, paid in cash, today.
Holding for six more years means earning that same profit one year at a time. While that may not seem like a long time, it carries a significant amount of risk. Whether it’s the uncertainty brought on by CDCP, or a high-producing associate leaving the clinic, as an owner you carry all the risk the future might hold. Taking money off the table means that you have all six years of that profit today.
Passive vs active income: your money starts working for you
Once the proceeds are in your hands, they can be invested across a diversified portfolio, such as a broad index fund. Instead of your wealth depending on one practice, it’s spread across hundreds of businesses, generating returns on its own.
In our scenario, $3.8 million invested with 8% returns* over six years turns into just over $6 million. That is an extra $2.2 million earned without lifting a finger. Generating this kind of growth in your practice would require a lot of your hours. In addition to that, you are still making 40% of your collections to fund your day-to-day, meaning you can leave the sale proceeds alone to grow.
Retained equity: a second chance to realize value
Earlier in the article, I mentioned a deal offering 90% cash. So what happens to the rest? Almost all DSO partnerships include a retained equity component, and how much that equity is ultimately worth depends heavily on what type of equity it is. Some structures tie your equity to the performance of the whole group, others to your own clinic, and some blend the two. Each comes with its own trade-offs in terms of risk, upside, and how much control you have over the outcome.
Keep in mind, this value only exists on paper until the platform has a capital event. The most common capital event is a recapitalization, where a new investor buys out part or all of the current ownership, usually at a higher value than when you joined. The platform could also be sold outright or go public.
Think of it like the value of your home: it’s real, but you don’t see the cash until you sell, and the price can change. That’s why a properly structured deal is key. The split between cash on close and retained equity depends on your financial goals, risk tolerance, and desired exit timeline.
Understanding these specific levers is one area where M&A advisors earn their value. A good advisor knows how different DSOs structure their offers, which terms are negotiable, and how to optimize for your situation. Not understanding these levers could potentially cost you millions.
Who should hold?
Selling today isn’t always the best option for owner dentists. The dentists who do better holding are the ones whose practices have significant growth opportunities they are confident in capturing themselves: an underutilized clinic, a hygiene program with room to expand, a location in a fast-growing community.
If you know you can meaningfully grow your EBITDA over the next few years, and are ready to put in the work and take the risks required, building that value before you sell may be the smarter move. But you can only make that call if you know what your practice is worth today.
Conclusion
Understanding this concept starts with answering two questions:
- How much longer do you want to practice?
- How much money do you need to not practice?
Many dentists are surprised when they see what they could make by selling today. For most, the gap between where they are and where they want to be is much smaller than they expected.
Whether you sell in the next year or 10 years from now, knowing your number gives you something most dentists never have: the ability to choose.
Start your journey today with a free AI-powered valuation.
*Returns outlined are illustrative and not guaranteed.