Too many dentists leave money on the table. Kevin Cumbus, founder and president of the mergers and acquisitions advisory group TUSK Partners, returns for an encore presentation on how dental practices can understand their options and maximize their valuation before selling to a dental support organization (DSO).

In his previous interview, Kevin explained how dentists have more choices than ever for a financial exit from their practice and the importance of evaluating multiple DSOs before committing to a deal. Now, Kevin returns to the Prosperous Doc® podcast to unpack common industry jargon so every dentist can have an informed conversation about private equity and corporate-owned dentistry.

In the early 2000s, only dentists were interested in buying dental practices. Now that DSOs backed by private equity have created a more competitive market for dental practices, demand outweighs the supply, driving up prices. Dentists today have an unprecedented opportunity to secure their financial futures — but the devil is in the details. Without understanding the terminology of a DSO’s offer, dentists could end up locked into an unfavorable deal that saddles them with too much risk.

“Where you actually realize the value from the sale of your business,” Kevin explains, “is in the enterprise value and how that enterprise value is received through structure. And the structure is made up of a couple of key components.”

What are those key components? Kevin joins host Shane Tenny, CFP® to define nine terms related to selling your dental practice that every dentist should know. From EBITDA to joint venture and holdco equity, Kevin puts economic concepts in layman’s terms so dentists can be prepared before they even start the conversation. .

💡 Featured Guest 💡

Name: Kevin Cumbus

What he does: Kevin is the founder and president of TUSK Partners, an M&A firm that exclusively represents sellers in transactions with DSOs. He has valued and sold over 120 dental practices, managed over $100MM of revenue in a DSO, and is the co-owner of a startup dental practice, Mundo Dentistry.

Company: TUSK Partners

Words of wisdom: “We encourage folks, especially around retirement planning, to think about that cash at close as being the linchpin or the victory lap to your retirement. But do not sell your largest income-producing asset without knowing that the cash at close is going to get you to financial independence.”

Connect: LinkedIn

💰 On the Money 💰

Top takeaways from this episode

• Valuations are higher than they were in the past. Twenty years ago, dentists had fewer options for selling their practices. Now, there’s more demand from private equity groups via DSOs. With higher numbers on the table, dentists may be tempted to sell at the first offer, but it’s prudent to wait.
• Deal structure matters more than multipliers. Someone could offer to buy your practice at 25x its value — but if that deal isn’t structured favorably, you won’t realize a cash payout. Dentists must understand how private equity transactions work.
• Investments are inherently risky. Just like buying a publicly traded stock,...