Every term, in plain English.
The vocabulary of a DSO transition, defined the way we explain it across the table, not the way an engagement letter does. Free, ungated, and linkable term by term.
Valuation
Adjusted EBITDA
Earnings before interest, taxes, depreciation, and amortization, adjusted to show what the practice earns for an owner who runs it economically. The single number most of your price hangs on.
Add-back
A personal or one-time expense added back to reported earnings: the family cell plan, the conference in Maui, above-market rent to your own building. Documented add-backs are accepted; undocumented ones are negotiated away.
EBITDA bridge
The walk from your tax-return numbers to adjusted EBITDA, add-back by add-back. A clean bridge survives diligence untouched; a messy one gets rebuilt by the buyer's accountants, in the buyer's favor.
Multiple
The price expressed as a factor of adjusted EBITDA. A $1M EBITDA practice sold for $7M went at a 7x multiple. Size, specialty, payor mix, and buyer competition set it.
Enterprise value (EV)
The headline price of the whole business, before the structure decides how much of it is cash, equity, or promises. Two offers with the same EV can be very different deals.
Quality of earnings (QoE)
An accountant's audit of your EBITDA, ordered by the buyer and increasingly by prepared sellers first. It either confirms your bridge or reprices your deal; sell-side QoE means no surprises.
Process
CIM
Confidential Information Memorandum: the full story of the practice, written the way buyer deal teams read. It shapes first bids, which shape everything after.
NDA
The non-disclosure agreement every buyer signs before seeing your name or your numbers. In the EDC Deal Room it is enforced in the database: no signature, no documents.
Data room
The secure online room where diligence documents live. Ours watermarks every page with the reader's identity and logs every view.
LOI
Letter of intent: the buyer's offer with headline terms, usually with exclusivity attached. The high-water mark of your negotiating power; what is vague in it resolves against you later.
Exclusivity
Your promise, once you sign an LOI, to stop talking to other buyers for a period. Normal, but it quiets your alternatives, which is why the LOI must be negotiated before you sign it.
Diligence
The buyer's verification of everything: financial, legal, clinical, operational. Slow diligence kills deals; prepared sellers keep it fast.
APA
Asset purchase agreement: the definitive contract of the sale. The LOI sketched the deal; the APA is the deal.
Structure
Cash at close
The part of the price wired to you on closing day. The only row of the offer that is money rather than terms; published norms run 60 to 80 percent of enterprise value.
Rollover equity
Price you reinvest as shares in the buyer's company instead of taking as cash. Really an investment decision wearing a deal term's clothes; see our full guide on the second bite.
Second bite
The payout when the platform holding your rollover equity itself sells or recapitalizes. Real for some sellers, theoretical for others; the difference is in the equity's terms.
Recapitalization
The platform-level transaction, usually a sale to the next private equity sponsor, that turns rollover equity into money. Typical sponsor holds run three to seven years.
Earnout
Price paid later only if targets are hit after close. Fair when it measures something you still control; risky when the buyer controls the levers being measured.
Holdback / escrow
Price parked with a third party against future claims, released on a schedule. Cash at close that is not actually at close.
Working capital peg
The agreed level of receivables and payables the practice must be delivered with. Set during diligence unless you pin it in the LOI, and a wrong peg quietly claws back six figures.
Seller note
Part of the price paid as a loan from you to the buyer, on interest, over years. You are financing your own buyer; price the credit risk accordingly.
Equity terms
Put right
Your right to make the company buy your shares back at defined terms. Without one, your only exit from rollover equity is waiting for theirs.
Tag-along
Your right to sell your shares on the same terms when the majority sells. It is what makes the second bite reach minority holders.
Drag-along
The majority's right to make you sell when they do. Standard, and fine, provided the tag-along travels with it.
Preferred vs common equity
Classes of shares paid in order at a sale. If a preferred class is paid fully before yours, your slice of the headline valuation can be smaller than the slide implied. Ask which class you hold.
The buyers
DSO / IDSO
Dental support organization: the entity that buys the non-clinical side of practices and supports operations. The I, when you see it, stands for invisible: platforms that keep the practice's local brand and autonomy.
Platform, add-on, tuck-in
Buyer language for deal size. A platform anchors a sponsor's strategy and prices highest; add-ons attach to an existing platform; tuck-ins fold a single location in. Same dentistry, different multiples.
Private equity sponsor
The investment firm funding the DSO. Their fund's timeline drives the recapitalization clock that decides when rollover equity pays.
IOI
Indication of interest: a buyer's preliminary, non-binding price range, before the LOI. In a competitive process, IOIs are how the field gets narrowed.
Deeper reads: the six LOI terms that matter most, rollover and the second bite, and the quarterly Multiples Watch.
Vocabulary is free. So is the conversation.
When a term shows up in a real offer on your desk, run the numbers through the offer second read, then ask us anything.