Your Equity Could Be Worthless: What to Know Before Selling to a DSO

Selling your dental practice to a DSO? Some dentists who took part of their payout in DSO equity may end up with nothing to show for it.

In this episode, Scott Leune sits down with Kevin Cumbus, founder and president of Tusk Practice Sales, to break down what's really happening in the DSO market today and how to protect yourself before you sell. Kevin's firm has completed about $1.5 billion in dental practice transactions over the last decade, exclusively representing dentists who are selling.

Of the roughly 150 private equity-backed DSOs today, about half have stopped acquiring practices. One prominent attorney in the space believes 30–40% of them won't recover, which means the equity dentists rolled into those DSOs could be worthless.

In this episode, you'll learn:

What happened to the DSO market, and why lower interest rates alone won't fix itHow valuations have shifted: a $1M EBITDA practice that traded at 8–9x in 2021 is closer to 6–7x todayWhy smaller groups ($1M–$3M EBITDA) are holding their value while larger groups are penalized for riskWhat private equity looks for in a platform, and how that differs from selling to an existing DSOHow deal structures have changed, from 80% cash at close to 70/30 or 60/40 cash-to-equityThe difference between HoldCo equity and joint venture (JV) equity, and why it matters for your payoutManagement fees of 3–8% of revenue, and what they can do to your distributionsHow to keep growing and share in the upside after you sellWhy the highest offer isn't always the right one

Whether you own one practice or a growing group, this episode will help you understand your options before a DSO comes calling.

⏱️ Timestamps

00:00 Intro02:09 Meet Kevin Cumbus of Tusk Practice Sales04:45 What happened to the DSO market06:38 Why 30–40% of DSOs may not recover09:52 Why five-year employment agreements are now a problem11:57 DSO 1.0, 2.0 and 3.0: the rise of JV equity13:53 Valuations then vs. now16:29 How multiples change by EBITDA size18:16 Multiple arbitrage and "growing down" your multiple22:18 What private equity looks for in a platform24:23 Deal structures: private equity vs. DSO31:38 The truth about management fees37:26 Selling while still growing41:28 Choosing the right partner, not just the highest offer46:11 A message of hope for private dentists

🔗 Connect with Kevin Cumbus and Tusk Practice Sales: [TUSK WEBSITE]

💰 This episode is sponsored by the Private Dental Alliance, helping private dentists get DSO-level pricing on