Between the LOI and the Wire: What Dentists Who Sold to a DSO Said Surprised Them

About a month ago I asked a question in r/Dentists, where dentists talk to each other without vendors in the room. The question was simple: if you sold to a DSO in the last couple of years, what surprised you between the LOI and closing? Did the price move, did the terms shift, what did their team dig into that you didn’t expect, and what would you have done differently a year or two before going to market?

Eighteen thousand people looked at it. Twenty-one replied, six of them describing a deal they lived or watched up close. I said up front that I work on the sell-side of dental M&A, which in that room is usually a reason not to answer, and they answered anyway, because the question was one they’d been waiting for someone to ask.

I’ve stripped every name, every DSO, and every detail that could identify anyone. What’s left is the pattern, and it sorts into three insights and one silence.

Pattern One: The Money That Moved

The deals that ended badly had a common structure. One owner, secondhand but told the same way in every corner of the industry, was offered twice what his practice was worth, took about half of it at close, and was to receive the rest over several years while working back in his own office as an employee. The years went by. The back half never came. He left, the office folded within months, and the patients scattered. He was paid, in the end, about what the practice was worth, and gave up the practice to get it.

Another owner described equity in the acquiring platform that turned out to be worth, in his words, less than the paper it was printed on: the platform couldn’t sell to a larger buyer, so the second bite never came, and the down-roster sellers would have been better off with the cash the first sellers got.

The deals that ended well had the opposite structure. One owner took 75% in cash at close and never counted the equity as anything but icing. Another, at one of the largest DSOs, described 75% up front and 25% paid with interest over three to five years, contingent on the practice collecting at least what it collected when it was bought, and said the LOI number was the closing number. A third said the same of a mid-sized group: paid exactly what the LOI laid out, share price tracking as pitched, three years in.

The difference between those two groups is not luck and it is not which DSO. It’s how much of the price depended on what happened after the seller stopped being in charge. Rollover equity is a security: minority, illiquid, leveraged, with an exit the seller doesn’t control. An earnout is a moving target tied to production the seller no longer directs. Cash at close is the only part of the price that isn’t a bet on someone else’s decisions.

Pattern Two: Promises Versus Paper

The angriest answer in the thread was from an owner who finished his initial contract and walked, and is now opening a new practice so he can be the owner again. His complaint wasn’t the price. It was that everything promised between the LOI and closing never happened. “They will say and promise you anything to get you to sign.”

He isn’t wrong, and the lesson isn’t that buyers lie. It’s that the exclusivity window is a negotiation dressed as a courtship, and anything that isn’t in the purchase agreement, the employment agreement, or the operating agreement is a conversation, not a term. The owners who reported no surprises said the terms were in writing and the terms were honored. That’s the same sentence.

Pattern Three: Someone Checked the Numbers

The owner who exited in early 2023 said something the others didn’t. He used an M&A firm well in advance, diligence came back as projected, he took his 75%, and because he had already stepped out of the chair he negotiated a nine-month transition instead of a multi-year employment obligation. His only regret was watching the platform’s margins compress afterward, from a distance, with most of his money already in the bank.

His deal had no surprises because there was nothing left to find. Someone on his side had already done the buyer’s work. That is the asymmetry in every dental transaction: the buyer spends fifty to two hundred thousand dollars learning what the practice is worth, and the average seller spends nothing. The few who close that gap describe a boring diligence. Boring is the goal.

The Joke That’s a Line Item

One commenter, deadpan, said he was sure the DSO found a number of credits in the AR that they wanted paid out first. The room laughed. I didn’t, because it’s a real deduction and I see it in nearly every ledger I open.

Three things come out of the price after the LOI, and none of them is a surprise to the buyer’s team. Add-backs the Quality of Earnings analyst disallows, which is the accounting face of Phantom EBITDA. A working-capital adjustment against a peg set at the LOI. And credit balances on the patient and insurance ledger, which the buyer treats as a liability it’s inheriting and prices accordingly. The practice I’ve written about all month carried $390,000 of refunds in the practice software against $150,000 on the P&L. That gap is named in the purchase agreement.

The Silence

Nobody answered the last part of the question. Not one owner said what he would have done a year or two before going to market.

I think that’s the most useful thing in the thread. Every answer was about the deal: the buyer, the structure, the promises, the equity, the payout. The deal is where the seller’s attention goes, because it’s where the money is visible. But everything that decided those deals happened before the LOI. Whether the add-backs had documentation. Whether the owner had paid himself at market for a year, so there was nothing to normalize. Whether the credits had been refunded. Whether the practice ran without the seller, so the buyer didn’t need three years of his labor as insurance. Whether anyone had read the ledger before the buyer’s team did.

The buyer was thinking about the two years before the deal. The sellers were thinking about the deal. That’s the whole gap, and the seller is the only one who can close it, because only the seller has those two years.

The Bottom Line

Take the cash. Put the terms in writing. Get someone independent to check the numbers before the buyer does. And start years out, because the buyer will when they pull your data.

If you sold already and something in this reads like your deal, I’d like to hear about it. Nobody’s specifics; the next owner walking into that window needs the pattern. The full breakdown of what comes out of the price after the LOI, and what to do two years before it, is in How to Sell a Dental Practice. If you’re inside that window, the Sell-Side Baseline is the buyer’s audit, run first.

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About the author — James DeLuca is the founder of Precision Dental Analytics and works in clinical data forensics and M&A defense: the independent Clinical Quality of Earnings for sellers, buyers, and lenders, run before the buyer’s team runs theirs. He is the author of Phantom EBITDA, The Dental Data Playbook, Hidden Levers, and Spartan Leadership. Meet the team →