The two years before you sell are worth more than the sale year

Buyers price dental practices on earnings and risk. By sale year, your earnings are what they are. But risk, the thing that decides where you land inside the multiple band, and sometimes which band you are in, is built or reduced in the two years before anyone signs anything. Dentists who start early do not just sell for more, they sell easier, because the practice that is ready for diligence is the practice diligence cannot shake.

Here is the preparation list we walk sellers through, ranked by payoff per unit of effort.

1. Clean the EBITDA bridge: highest payoff, lowest effort

Personal expenses run through the practice, family members on payroll, above-market rent paid to your own building entity: every dollar of it suppresses reported earnings. At sale, add-backs can recover some of that, but a messy bridge is negotiated, a clean one is accepted. A dollar of clearly documented EBITDA is worth its multiple; a dollar the buyer has to take on faith gets discounted or struck.

• Separate personal spending from practice books now, not in diligence.
• Put related-party arrangements, rent especially, at documented market rates.
• Keep clean monthly financials. Quality of earnings work goes fast when the books cooperate, and slow diligence kills deals.

2. Reduce doctor dependence

The single question behind every DSO underwriting model: what happens to production when the selling doctor slows down? If the answer is that the practice halves, the buyer is not buying a practice, they are buying you, and they will price the risk accordingly. Associate coverage, a strong hygiene program, and documented systems all move production off your personal shoulders and onto the asset being sold.

Buyers pay for what survives your absence. The practice that runs a week without you is worth more than the one that cannot.

3. Shape the payor mix deliberately

Fee-for-service and stable PPO revenue underwrite stronger than heavy dependence on a single payor or program. Payor mix moves slowly, which is exactly why it belongs on the two-year list and not the sale-year list. Even a modest, documented shift in trajectory reads well: buyers price direction, not just position.

4. Show capacity, not just performance

Growth a buyer can see is growth a buyer will pay for. Open chairs, expandable days, hygiene headroom, and a demonstrated ability to add an associate all argue for the top of your band, because the buyer’s model gets to grow revenue without heroic assumptions. If you have the demand to add a day and have not, adding it a year before sale is one of the few moves that raises both earnings and the multiple on those earnings.

5. Retain the team you are selling with

Staff turnover in the year before a sale spooks buyers and complicates transitions. Reasonable retention economics for key people, especially associates with patient relationships, cost far less than the valuation haircut their departure causes mid-diligence.

Curious where you stand before doing any of it? The instant estimate takes about a minute, and the deal readiness check scores most of the dimensions in this article. Both are free, neither asks for your email.