Show Notes
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 it How valuations have shifted: a $1M EBITDA practice that traded at 8–9x in 2021 is closer to 6–7x today Why smaller groups ($1M–$3M EBITDA) are holding their value while larger groups are penalized for risk What private equity looks for in a platform, and how that differs from selling to an existing DSO How deal structures have changed, from 80% cash at close to 70/30 or 60/40 cash-to-equity The difference between HoldCo equity and joint venture (JV) equity, and why it matters for your payout Management fees of 3–8% of revenue, and what they can do to your distributions How to keep growing and share in the upside after you sell Why 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 Intro 02:09 Meet Kevin Cumbus of Tusk Practice Sales 04:45 What happened to the DSO market 06:38 Why 30–40% of DSOs may not recover 09:52 Why five-year employment agreements are now a problem 11:57 DSO 1.0, 2.0 and 3.0: the rise of JV equity 13:53 Valuations then vs. now 16:29 How multiples change by EBITDA size 18:16 Multiple arbitrage and "growing down" your multiple 22:18 What private equity looks for in a platform 24:23 Deal structures: private equity vs. DSO 31:38 The truth about management fees 37:26 Selling while still growing 41:28 Choosing the right partner, not just the highest offer 46:11 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 equipment, supplies, and lab fees. Text SAVINGS to 48659 to see how much you could save.
🎧 Listen and subscribe: https://dentalceopodcast.com
Available on Apple Podcasts, YouTube, and Spotify.
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