Guide
The five-year dental practice exit timeline
A practice exit that clears maximum value is built five years before the closing table, not five months.
If you sold your practice yesterday for exactly what it is worth today, you would probably leave twenty to forty percent of its potential value on the table. Not because the buyer ripped you off, but because a practice at maximum enterprise value is a different practice than the one most owners are running on any given Tuesday.
The gap is operational, financial, and legal. It takes roughly five years to close it. What follows is the timeline I wish someone had handed me at the start of my first practice sale process.
Begin thinking like a seller
No major operational changes yet. The work at this stage is mental and financial.
Start tracking the metrics a DSO will buy. Revenue, collections, new-patient acquisition cost, hygiene production per hour, hygiene reappointment rate, cancellation rate, overhead as a percentage of collections, doctor compensation as a percentage of collections. Most practices have not looked at these metrics in years. Begin keeping a quarterly dashboard.
Get a quality-of-earnings-level financial picture of your practice. If your books are on cash-basis QuickBooks with your spouse doing reconciliation on Sundays, the gap between that and what a buyer's diligence will find is going to cost you money. Move to accrual-basis accounting with a CPA who has done at least one dental transaction.
Operational cleanup
This is where the real enterprise-value work begins. Two projects, roughly in parallel.
First, staff the practice to run without you on the premises. An associate doctor, a full-time office manager, a treatment coordinator. This is expensive. It also transforms the practice from a job into an asset. A DSO that looks at your practice and sees you, the doctor, as the irreplaceable revenue generator will price the practice at a discount, because you are selling them the problem of replacing you.
Second, clean up the real estate. If your practice is in a building you own, get the lease between your practice entity and your real estate entity onto market terms with a formal arms-length document. If you lease from a third party, renegotiate to a sale-friendly structure — long remaining term, transferable, clean assignment language.
Structural and legal groundwork
Talk to an estate attorney who does dental transactions. Not a generalist. The tax efficiency of your eventual sale proceeds depends on choices made three years before you sell, not three weeks before.
Consider whether your corporate structure needs to change. Many solo-doctor practices are set up as S-corps that served them fine for operating income but are suboptimal for a sale. F-reorg, QSBS planning, and the difference between asset sale and stock sale treatment all live here.
Update your operating agreements, especially if you have partners or associates with deferred compensation, buy-in equity, or right-of-first-refusal clauses. Every one of these is a complication at the closing table. Resolve them when you have leverage and time.
Growth investment year
Counterintuitive: the two-year-out window is where you make growth investments you might otherwise skip. The reason is simple EBITDA math. If you add $200K of EBITDA in year 2 through a hygiene hire or a strategic equipment purchase, and that EBITDA becomes the base for a 6x multiple at sale, the investment returned $1.2M at exit. The same investment made three months before sale does not run long enough to show up in trailing-twelve-month EBITDA.
Investments that typically pencil at this stage: one additional hygienist, marketing infrastructure (SEO, paid search, local content), technology that reduces doctor chair time (intraoral scanner if you don't have one, AI clinical documentation), and if you have the patient base, a specialty service line (clear aligners, limited implants).
Engagement and quality of earnings
Engage a dental-specific broker or M&A advisor. The difference between a dental-specific advisor and a generalist business broker is measurable in six figures. A generalist does not know which DSOs are actively buying in your region, does not know which ones will pay a premium for your payer mix, and does not know where your specific practice fits in each DSO's current portfolio strategy.
Commission a pre-market quality of earnings report. $8K to $15K. This is the single highest-ROI expenditure in the entire sale process. You find the adjustments and add-backs before the buyer's diligence team does; you set the EBITDA baseline on your terms, not theirs.
Begin quiet conversations with potential acquirers through your advisor. Not a formal market process yet. A sense of pricing, a sense of interest, a sense of which terms matter most in your segment.
Formal market process
LOIs, term sheets, negotiation, selection. If you have done the work in years 5 through 1 right, this stage is a competitive process with multiple real offers and real leverage. If you have not, this stage is a single-bidder conversation in which the buyer knows you have no alternatives.
Diligence, APA, close
Heads-down execution. The work at this stage is legal, accounting, and transitional. The sale itself is 95 percent administrative execution of decisions made earlier. If you are doing major strategic thinking in the final 90 days, something went wrong in the preceding four years.
What if you do not have five years?
You compress. Year 5 through Year 3 work can be done in 12 to 18 months if you commit to it aggressively, with a higher cost per unit of EBITDA added. Year 2 through Year 1 work cannot be compressed meaningfully — you cannot retroactively add growth investment that needs time to compound.
If you are 12 months from a planned exit and you are just reading this article, your priority list is: quality of earnings, advisor engagement, and the specific pieces of year-3 legal work that are still possible in that window. Accept that you are leaving money on the table and focus on maximizing what is still possible.