Accessing Dental Practice Equity, Mitigating Market Risk and Maximizing Long Term Returns

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Dental Support Organizations (DSOs) are currently growing at an ever-increasing rate. The largest DSOs are growing their number of practices by approximately 14 percent per year. Regardless of current market disruptions, when calculating valuations, dental practice multiples still remain at record highs.

For owners that would like to access the equity in their practice and continue working, now is the time to act. Dental practices will benefit from a phenomenal capital appreciation and flexible wealth creation opportunity, including a large up-front payout, rollover equity and other growth investment options. As a result, doctors will be able to focus on their clinical passions and their patients so they receive the quality care the doctors uphold.

When searching for an M&A advisor, choose one that transacts with highly capitalized dental support organizations, private equity firms and family offices that have interest and provide incredible offers and operational freedom. Being properly represented is the key to a top valuation and better terms. After all, when transitioning to private equity the offer goes well beyond the valuation. It also includes negotiations for employment agreements, bonus structures, equity, benefit packages and more. A great M&A advisor will carefully manage every aspect of the transaction, driving the transaction to close with velocity.

As America’s leading M&A advisory and investment bank in dentistry, Viper Equity Partners merges dental practices with private equity. I personally speak with thousands of doctors each year. A recurring topic of discussion is the actual understanding of the process and the strategies that are available. All DSOs and transition strategies are not alike and each has its own unique business model and philosophy.

Viper’s clients receive top-notch guidance from an expert M&A staff that will package the dental practice, facilitate all outreach, negotiate the best offers available in the marketplace and take owners to a successful close. Your dental practice will partner with and receive sustained investments from an experienced team of dental stalwarts that have a history of successfully growing provider-led businesses by supporting their unique organizational cultures while creating significant shareholder value.

Finding the right partner is of the utmost importance. Our partnering groups will allow doctors to maintain their brand, staff, and the organizational culture they have worked hard to create without the headache of running day-to-day operations. Their practice will also receive economies of scale to increase their profitability and state-of-the-art back-end support associated with insurance, coding, billing, regulatory, marketing, benefits, IT and compliance.

The supporting partner groups will provide qualified leads and referral business to grow the doctor’s practice faster than ever before, allowing them to become a key member with a legacy as part of a rapidly growing, market-leading national dental platform.

Alternative Strategies
As investment bankers we have the ability to structure alternative transition strategies that maximize the valuation and terms for our clients. Viper Equity Partner’s value-added approach is the basis for our continued growth and success. The two most popular alternative strategies include roll ups and Sub-DSO transitions.

The Roll Up Model
Roll ups create higher valuations through multi-practice consolidations and involve the consolidation of several individual dental practices into a single larger offering, providing a larger footprint, higher collections and higher overall EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization); the basis for multiple and valuation calculations. Roll up strategies can be non-integrated or integrated.

A non-integrated roll up strategy values each practice individually; however, they are all offered together using a single business summary as a group sale based on specific variables such as practice type or region. At closing each practice runs through the post-LOI Quality of Earnings (Q of E) process individually.

An integrated roll up strategy is more complicated and takes more time since all of the included practices are consolidated into a new entity based on agreed upon operating agreement with each individual practice’s ownership being based on financial analysis. All of the practice financials will also be consolidated and placed on the same accounting and management software. They will also use the same outside providers for services such as lab work and supply purchasing. The benefit of an integrated roll up is that it provides even higher multiples and valuations than a non-integrated roll up and attracts more attention from interested parties.

Using either strategy, roll ups create a more attractive offering to partnering Dental Support Organizations (DSO), Private Equity Firms and Family Offices, with the ability to generate large valuation increases as compared to a standard single office practice transition.

The Sub-DSO Model
For larger multi-office practice owners that are considering a transition to private equity, as well as completed roll ups, a Sub-DSO may be the strategy of choice. Many multi-office practice owners have built their practices through acquisition using bank loans and other debt obligations. Raising debt can only take practices so far and there is a capitulation point when a true investment partner can scale multi-office practices to new levels.

When transitioning as a Sub-DSO, the practice owner will exit the transaction debt free with a large upfront payment and typically hold 40% ownership and profit share in the Sub-DSO portfolio. Returns are made on various levels including equity, profit sharing and exit upon a Parent DSO recapitalization.

With the Parent DSO as an investment partner, the Sub-DSO owner would step into a business development role, tasked with sourcing and acquiring as many quality practices as possible. Viper Equity Partners would also source practices and handle all due diligence and closing activities. The Sub-DSO owner would continue to manage the clinical aspects of every office within their own practice portfolio.

When a recapitalization event occurs for the Parent DSO they may choose to bring the Sub-DSO into the Parent DSO portfolio as part of the transaction to increase EBITDA. The Parent DSO can recapitalize their equity at a double-digit multiple based on the massive combined EBITDA. Subsequently, the Sub-DSO could also exit their equity ownership at a double-digit multiple, establishing incredible gains as compared to their single-digit multiple cost of acquisition.

About Viper Equity Partners
Viper Equity Partners is America’s leading M&A advisory and investment bank in dentistry, with over $1.8 billion closed since 2009 and 110 transactions closed in 2019. Viper’s M&A relationships with family offices and private equity-funded organizations are unique. The Viper Team consults with practice-owning doctors and roll up groups from potential integration and marketing to offer negotiations and diligence to the closing table.

About the Author: As Senior Vice President of Corporate Development, Don Schwall leads large dental M&A at Viper Equity Partners. He designs and completes multi-office and roll-up dental practice transitions with velocity at the highest valuations, adding value and scale at every level. His innovative corporate development experience enables him to lead multiple complicated projects and transactions simultaneously while drawing from his expertise in corporate strategy, mergers & acquisitions, recapitalizations and private equity. To learn more about dental practice transition opportunities contact Don Schwall directly using (561) 530-4416 or

Read other Viper Equity Partners articles:

In A Hot Dental Market, Viper Equity Partners Fires Up To Expand M&A Reach

Viper Equity Partners Unites Dental Practices With Private Equity And DSOs

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A Big Win For DSOs As Virginia-Based Light Wave Dental Enters North Carolina Market

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