Guide to Selling a Dental Practice in Oregon

Selling your dental practice is a major decision that involves more than just finding a buyer. For dental practice owners in Oregon, the current market presents unique opportunities and challenges. This guide offers insights into the Oregon market, the sale process, and key considerations that will help you understand your options and prepare for a successful transition, whether you plan to sell next year or in the next five years.

Market Overview

The Oregon market for dental practices is attractive. The state’s population has a higher median income and education level than the national average, suggesting a strong patient base with the means for comprehensive care. While there are about 3,367 residents for every general dental practice, which is a competitive ratio, the demand for specialty services is high.

At the same time, the landscape is changing. Broader economic trends are accelerating the growth of Dental Support Organizations (DSOs) across the state. For independent practice owners, this represents both a new type of potential buyer and a reason to assess your strategic position. Understanding these local and national forces is the first step in timing your exit correctly.

Key Considerations

Selling your practice is a project that you should begin preparing for long before you list it. Starting the process 2-3 years in advance is not too early. This is because buyers pay for proven performance, not just potential. Here are a few key areas to consider.

Oregon Ownership Rules

Oregon law (ORS 679.020) is strict. Generally, only a licensed dentist can own and operate a dental practice in the state. While there are exceptions, this rule shapes the pool of potential buyers and the structure of a sale. It is a critical detail that must be handled correctly from the start.

Your Professional Team

You will need a team of advisors who specialize in dental practice sales, not general business. This includes an M&A advisor, an attorney, and an accountant, all with experience in your specific field. Their expertise in dental transactions can help you avoid common pitfalls and optimize your financial outcome.

Pre-Sale Improvements

Look at your practice through the eyes of a buyer. Are there simple ways to boost revenue or streamline operations? Improving a patient recall system or updating the look of your office can make a measurable difference in your practice’s valuation. An advisor can often spot opportunities you may have overlooked.

Market Activity

While headlines often talk about consolidation, the full story is more nuanced. It is true that solo practice ownership has declined nationally, from nearly 85% in 2005 to 73% in 2021. However, dental practices remain one of the most stable small businesses, with a failure rate of only about 1%. This stability is what makes them so attractive to buyers.

Valuation multiples are not what they used to be. The old rule of thumb of 1.5 to 2 times annual revenue is no longer a reliable guide. Today s buyers, especially DSOs and private equity groups, use more sophisticated methods. They look at profitability, growth potential, and operational efficiency. This means a well-run practice can still command a premium valuation, but it requires a structured process to demonstrate that value.

The Sale Process

Every practice sale is unique, but most follow a similar path. We do not just “list” your practice. We run a professional process designed to protect your confidentiality and create a competitive environment to find the right buyer.

1. Valuation and Preparation. It begins with a comprehensive valuation to understand your practice’s true worth. This is also when you gather financial records, employee contracts, and equipment inventories.
2. Confidential Marketing. Your M&A advisor confidentially presents the opportunity to a curated database of qualified buyers, including other dentists, local groups, and DSOs.
3. Buyer Due Diligence. Interested buyers will conduct a thorough review of your practice. This is where meticulous preparation pays off, as it builds buyer confidence and prevents delays.
4. Negotiation and Closing. Your advisor helps negotiate the final terms of the Letter of Intent and the definitive Purchase Agreement to ensure they align with your goals.
5. Transition. After the sale closes, you will work with the new owner to ensure a smooth transition for your staff and patients.

Valuation

Many practice owners believe their business is worth a multiple of its annual revenue. The truth is that sophisticated buyers value your practice based on its profitability, specifically its Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

This figure starts with your net income and adds back non-operational or owner-specific costs, like a car lease run through the business or an above-market owner salary. We find that most practices are undervalued until this number is calculated correctly. What you think is a $500,000 profit might actually be $700,000 in Adjusted EBITDA in the eyes of a buyer. That difference, when multiplied by a factor of 5x to 8x, can mean millions in your final sale price. Other factors like having multiple associate dentists and efficient systems also increase this multiple.

Post-Sale Considerations

The work is not over once the sale contract is signed. Planning for the post-sale period is just as important as preparing for the sale itself. A well-structured agreement protects your legacy, your staff, and your financial future. Key areas are often negotiated upfront.

These details can have a major impact on your final net proceeds and peace of mind. Thinking them through with an advisor from the beginning ensures there are no surprises at the end.