Items That Should Be Addressed in a DSO Offer
124 Items Across 10 Sections
This checklist does not determine whether the offer is good or bad and is not legal, tax, accounting, investment, or financial advice. It is not a negotiation script, a list of demands, or a substitute for professional diligence. A DSO transaction is structurally different from a traditional practice sale. Rollover equity, earnouts, post-closing control, platform debt, tax structure, and risk allocation can matter more than the headline price. A DSO transaction may involve cash, rollover equity, seller notes, earnouts, restrictive covenants, tax consequences, and platform risk. The seller should retain a dental transaction attorney, CPA or tax advisor, and financial advisor or investment banker as appropriate. This tool only helps identify whether major issues have been addressed clearly enough for the parties to understand their obligations; it does not determine whether the terms are fair, market, enforceable, or advisable. Mark Yes when the item is addressed clearly and specifically. Mark No when the item is not addressed. Mark Not Clear when the item appears to be addressed but the language is vague, incomplete, ambiguous, or needs additional explanation. Any No or Not Clear item should be addressed in writing before the document is finalized.
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OFFER STRUCTURE AND PARTIES
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1The buyer, seller, management company, clinical entity, and related parties are identified.
2The transaction structure is identified.
3The practices, entities, and locations included in the offer are stated.
4The offer states whether real estate is included or excluded.
5The offer states whether the seller is selling assets, equity, or both.
6The offer identifies which entity will employ or contract with the seller after closing.
7The offer identifies which entity will control non-clinical operations after closing.
8The offer identifies which clinical entity will hold patient records and clinical responsibilities after closing.
9The offer addresses clinical autonomy, professional entity ownership, and corporate practice compliance.
10The offer identifies whether any MSO or management services agreement will be used.
11Any management services agreement identifies the management fee amount or formula and the services covered.
12The offer identifies all documents required to complete the transaction.
ENTERPRISE VALUE AND PURCHASE PRICE
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13The headline valuation is stated.
14The EBITDA or other metric used for valuation is stated.
15The multiple used for valuation is stated.
16The adjusted EBITDA calculation is explained.
17All add-backs are listed.
18All normalization adjustments are listed.
19Doctor compensation assumptions are stated.
20Owner compensation replacement assumptions are stated.
21Rent normalization assumptions are stated.
22Management fee assumptions are stated.
23The offer states whether the valuation is before or after debt, working capital, and transaction adjustments.
24The offer addresses the expected tax structure, purchase price allocation, personal goodwill treatment, and estimated after-tax proceeds to seller.
25The offer states whether cash, debt, seller notes, equipment loans, and other liabilities reduce proceeds.
CASH, EQUITY, SELLER NOTES, AND HOLDBACKS
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26The amount of cash paid at closing is stated.
27The amount or percentage of rollover equity is stated.
28The class, rights, and priority of rollover equity are stated.
29The entity in which rollover equity will be held is identified.
30The offer states whether rollover equity is in the parent company, regional platform, local entity, or another entity.
31The offer states whether rollover equity is common, preferred, profits interest, or another instrument.
32The offer states whether the tax treatment of rollover equity is addressed.
33The offer states whether rollover equity is subject to dilution.
34The offer states whether rollover equity has voting rights.
35The offer states whether rollover equity has information rights.
36The offer states whether rollover equity has transfer restrictions.
37The offer states how rollover equity is valued when issued and how it will be valued at exit.
38Any seller note is stated.
39Seller note interest rate and payment terms are stated.
40Seller note subordination terms are stated.
41Any escrow, holdback, or indemnity reserve is stated.
42The conditions for release of any holdback are stated.
EARNOUT AND CONTINGENT PAYMENTS
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43Any earnout is stated separately from guaranteed proceeds.
44The earnout measurement period is stated.
45The earnout metric is stated.
46The earnout formula is objective and calculable from stated data.
47The offer states who controls the operations that affect the earnout.
48The offer states how staffing changes affect the earnout.
49The offer states how marketing changes affect the earnout.
50The offer states how fee changes affect the earnout.
51The offer states how payer contract changes affect the earnout.
52The offer states how accounting changes affect the earnout.
53The offer states how doctor compensation changes affect the earnout.
54The offer states whether the seller has audit or information rights for earnout calculations.
55The offer states when earnout payments are made.
56The offer states what happens to the earnout if the buyer sells the platform before the earnout is completed.
DEBT, CAPITAL STRUCTURE, AND PLATFORM RISK
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57The buyer's debt structure is addressed at a high level.
58The offer states how the buyer plans to fund the transaction, including debt, equity, seller notes, or other sources of capital.
59The offer states whether practice-level debt will be assumed, paid off, or remain with seller.
60The offer states whether rollover equity is subordinated to lender debt.
61The offer states whether the platform has preferred equity with liquidation preferences.
62The offer states whether management fees, monitoring fees, or transaction fees may affect equity value.
63The offer states whether dividend recapitalizations may occur.
64The offer states whether seller equity participates equally in future distributions.
65The offer states what information the seller receives about platform financial performance after closing.
66The offer states whether seller has any rights if the platform violates lender covenants.
67The offer states whether seller has any protection if future capital raises dilute equity.
EMPLOYMENT OR POST-CLOSING SERVICES
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68The seller's post-closing role is stated.
69The required post-closing clinical schedule is stated.
70The required post-closing term is stated.
71The seller's post-closing compensation is stated.
72The compensation formula after closing is stated.
73The agreement states whether compensation is based on collections, production, EBITDA, salary, or another metric.
74The agreement states who controls fees after closing.
75The agreement states who controls payer participation after closing.
76The agreement states who controls marketing after closing.
77The agreement states who controls staffing after closing.
78The agreement states who controls supplies, labs, vendors, technology, and equipment purchases after closing.
79The agreement states whether seller has management duties after closing.
80The agreement states whether seller has clinical autonomy after closing.
81The agreement states whether seller can reduce days, retire, or transition out and under what conditions.
GOVERNANCE AND CONTROL
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82The offer states who controls budgets after closing.
83The offer states who controls hiring and firing of non-clinical staff after closing.
84The offer states who controls associate hiring after closing.
85The offer states who controls specialist relationships after closing.
86The offer states who controls expansion, relocation, or closure decisions after closing.
87The offer states who controls major capital expenditures after closing.
88The offer states whether seller has board, advisory, or governance rights.
89The offer states whether seller has consent rights over material decisions.
90The offer states whether seller has rights to review monthly practice financials.
91The offer states whether seller has rights to review platform financials.
RESTRICTIVE COVENANTS AND EXIT RESTRICTIONS
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92Any non-compete obligation is stated with duration, geography, and scope.
93Any non-solicitation obligation is stated with duration and scope.
94Any non-disparagement obligation is stated.
95The offer states whether the seller may own, invest in, consult for, or manage other dental businesses after closing.
96The offer states whether the seller may practice clinically outside the platform after closing.
97The offer states whether the seller may work in teaching, consulting, speaking, or advisory roles after closing.
98The offer states what happens if the seller leaves before the required employment or service term ends.
99The offer states whether leaving early affects cash, equity, earnout, or seller note payments.
100The offer states whether termination without cause affects earnout, equity, or future payments.
101The offer states whether disability, death, or illness affects post-closing obligations.
OPERATIONS, PATIENTS, AND BRAND
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102The offer states whether the practice name will continue after closing.
103The offer states whether seller name and reputation may be used after closing.
104The offer states how patient records are handled after closing.
105The offer states how patient communication about the transaction is handled.
106The offer states how refunds, remakes, warranties, and complaints from pre-closing treatment are handled.
107The offer states who is responsible for pre-closing malpractice claims and any required tail coverage.
108The offer states how prepaid treatment and patient credits are handled.
109The offer states how unfinished treatment is handled.
110The offer states how associate contracts transfer or change after closing.
111The offer states how team compensation and benefits change after closing.
112The offer states how vendor contracts, software, phones, websites, and marketing assets transfer after closing.
CLOSING CONDITIONS AND RISK ALLOCATION
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113Due diligence conditions are stated.
114The offer states whether closing is contingent on financing approval and what happens if financing is not obtained.
115Regulatory, board, corporate practice, or professional entity requirements are addressed.
116Landlord consent requirements are stated.
117Lender payoff requirements are stated.
118Payer credentialing or contract transfer issues are addressed.
119Representations and warranties are stated.
120Indemnity obligations are stated.
121Survival periods are stated.
122Deductibles, baskets, caps, and exclusions for indemnity are stated.
123Dispute resolution process is stated.
124Attorney fee responsibility is stated.
A downloadable, interactive version is available on the Publications page at DDS Private Capital.
This checklist is for educational purposes only and is not legal, tax, accounting, investment, or financial advice. A DSO transaction is structurally different from a traditional practice sale. Consult a qualified dental transaction attorney, CPA or tax advisor, and financial advisor or investment banker as appropriate before relying on any offer.
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