Selling your dental practice in Ohio is a significant milestone that involves more than just market dynamics. It’s a personal and financial turning point. In today’s active market, preparation is the key to maximizing your outcome. This guide provides a clear overview of current valuations, the sale process, and critical factors for you to consider. We will walk you through what to expect, helping you move forward with confidence.
Ohio Dental Practice Market Overview
The market for dental practices in Ohio is currently healthy and active. We see strong interest from both individual dentists and larger Dental Service Organizations (DSOs), creating a competitive environment for sellers. This demand supports solid valuations.
Financially, single-doctor practices in Ohio are selling for 62% to 78% of their annual collections. This range is consistent with national averages and shows the stability of the Ohio market. For context, many practices in the state generate around $800,000 in annual revenue. This provides a solid starting point for understanding your practice’s potential value before diving into the specific details that can move your valuation to the higher end of the scale.
Key Considerations for Ohio Dentists
Beyond the numbers, a successful sale hinges on careful planning. Thinking about these areas early on will put you in a much stronger position when you decide to act.
Your Timeline and Goals
The right strategy depends on what you want to achieve. Are you looking for a quick exit, or do you want to maximize your sale price, even if it takes more time? Answering this question first helps shape every other decision. Many owners think they should wait until they are ready to sell to start planning. That is a mistake. The best outcomes are achieved by preparing one to two years in advance.
Tax Structure
How your sale is structured has a massive impact on your net proceeds. The allocation of the purchase price to assets like equipment, real estate, and goodwill determines your tax liability. Since goodwill can represent 80-90% of a practice’s value and is often taxed at a lower capital gains rate, professional structuring is one of the most important parts of the process.
Your Advisory Team
You would not handle a complex clinical case without the right tools and support. Selling your practice is no different. Assembling a team with an M&A advisor, an accountant, and a lawyer who all specialize in dental transactions protects your interests and helps you navigate the complexities of valuation, negotiation, and due diligence.
Current Market Activity
The demand for quality Ohio dental practices is fueling a swift-moving market. Transactions often move from listing to closing in just four to six weeks. This pace highlights the need for advance preparation. If your documents are not in order, you can miss opportunities with the best buyers.
We are seeing two main types of buyers in the Ohio market.
1. The Private Buyer. This is often another dentist looking to own their first practice or expand. These deals typically involve receiving the full purchase price at closing, offering security and a clean break.
2. The Dental Service Organization (DSO). DSOs may offer a higher overall valuation, but the deal structure is different. You might receive 60-70% of the price upfront, with the rest paid out over several years based on the practice’s performance. This often requires you to stay on as an employee dentist for a set period.
The Dental Practice Sale Process
Selling a practice follows a structured path. While every deal is unique, the journey generally involves these five stages. Understanding them helps remove uncertainty from the process.
- Valuation and Preparation. This starts with a comprehensive valuation to understand what your practice is truly worth. It also involves gathering financial statements, tax returns, and equipment lists so you are ready for buyer scrutiny.
- Confidential Marketing. Your advisor will create a marketing package and present your practice to a pool of vetted buyers, all under strict confidentiality agreements to protect your staff, patients, and reputation.
- Negotiation and Letter of Intent (LOI). Once offers are received, we help you negotiate the best terms. The agreed-upon price and key terms are then outlined in an LOI.
- Due Diligence. This is the most intensive phase. The buyer will verify all the information you have provided. This is where deals most often face delays or fall apart. Being thoroughly prepared is your best defense against surprises.
- Closing and Transition. After completing due diligence and legal documents, the sale closes. You then work with the new owner for a predetermined period to ensure a smooth transition for patients and staff.
How Your Dental Practice is Valued
Many owners believe their practice’s value is a simple formula, like a percentage of revenue. While that is a starting point, a true valuation looks deeper to find the real profitability that buyers are willing to pay for. It is less about a single number and more about telling the right financial story.
A professional advisor looks at your practice from multiple angles to determine its market value. Here are a few common, simplified methods:
| Valuation Method | How It’s Calculated | What It Means for You |
|---|---|---|
| Gross Revenue | Annual Collections x 0.65 – 0.78 | A quick snapshot of value based on top-line income. |
| SDE Multiple | Seller’s Discretionary Earnings x 1.7 | Captures the total financial benefit to one owner-operator. |
| EBITDA Multiple | Adjusted EBITDA x 1.63+ | The method serious DSOs and investors use. It reflects the practice’s underlying profitability after normalizing expenses. |
The key is often in calculating the Adjusted EBITDA, where we add back owner-specific perks and non-recurring expenses to show a buyer the practice’s true cash flow potential. This step alone can significantly increase a practice’s final valuation.
Planning for Life After the Sale
The work is not over once the closing documents are signed. A successful transition ensures your legacy is protected and sets you up for your next chapter. Planning for this phase is just as important as planning for the sale itself.
The Transition Period
Most sale agreements require the selling dentist to remain with the practice for a period of a few weeks to a few months. Your role is to help introduce the new owner to patients, staff, and referral partners. A well-managed handover ensures continuity of care and maintains the goodwill you worked so hard to build.
Managing Your Proceeds
After taxes and fees, sellers often retain around 70% of the sale price. Receiving a large, lump-sum payment requires careful financial planning. Working with a financial advisor before the sale closes can help you create a strategy for managing these funds to meet your long-term personal and financial goals.
Protecting Your Legacy
For most dentists, the practice is more than a business. It’s a key part of their identity. The right deal structure can help ensure your staff is retained and that your patients continue to receive excellent care. Defining what a “good” legacy looks like for you is a critical part of choosing the right buyer.
Frequently Asked Questions
What is the current market value range for dental practices in Ohio?
Dental practices in Ohio typically sell for 62% to 78% of their annual collections, which aligns with national averages. Many practices generate around $800,000 in annual revenue, serving as a base for valuation.
How long does the sale process for an Ohio dental practice usually take?
The sale process in Ohio often moves swiftly, with transactions typically concluding within four to six weeks once the practice is listed. This highlights the importance of thorough preparation ahead of listing.
What are the main types of buyers for dental practices in Ohio?
There are two primary types of buyers: Private Buyers (individual dentists looking to buy or expand their practice, usually paying the full purchase price at closing) and Dental Service Organizations (DSOs), which may offer higher valuations but pay part of the price over several years and require the seller to stay on as an employee dentist temporarily.
What are key factors to consider when planning to sell my dental practice in Ohio?
Key considerations include deciding your timeline and goals (quick exit vs. maximum sale price), structuring the sale to optimize tax treatment (especially allocation to goodwill), and assembling a specialized advisory team with an M&A advisor, accountant, and lawyer familiar with dental practice sales.
What happens during the transition period after the sale of a dental practice in Ohio?
The selling dentist usually remains with the practice from a few weeks to a few months to introduce the new owner to patients, staff, and referral partners. This ensures continuity of care and helps protect the practice’s legacy and goodwill.