Guide to Selling a Dental Practice in Raleigh, NC

Selling your Raleigh, NC, dental practice is one of the most important decisions of your career. It is a major financial and personal event that requires careful planning to achieve the best outcome. This guide offers insight into the Raleigh market, key considerations for timing your sale, understanding your practice’s true value, and navigating the transition. Proper preparation is the first step toward securing your legacy and financial future.

Market Overview

The market for dental practices in Raleigh is active and competitive. As one of the fastest-growing metro areas in the country, Raleigh attracts both new dentists looking to acquire their first practice and established groups aiming to expand their footprint. This demand creates significant opportunities for sellers, but it also means you need a clear strategy to stand out and command a premium price. The landscape is not just about individual buyers anymore.

A Competitive Landscape

Raleigh s strong economy and population growth make it an attractive location for dental professionals. This means there is a healthy pool of potential individual buyers, from recent graduates to experienced dentists seeking ownership. These buyers are often looking for a practice with a stable patient base and a strong community reputation. They value the legacy you have built.

The Rise of Group Practices

At the same time, Dental Service Organizations (DSOs) and private equity-backed groups are aggressively acquiring practices in the area. These groups are sophisticated buyers with deep pockets and experienced deal teams. While they can offer attractive valuations, their deals often come with complex terms. Understanding how to navigate an offer from a DSO versus an individual doctor is a critical part of the process.

Key Considerations for Raleigh Dentists

As you begin to think about selling, several practical questions will come to mind. Your answers will shape your exit strategy and timeline. Getting these right from the start can have a major impact on your final sale price and the smoothness of the transition.

1. When should you start planning? The ideal time to begin preparing for a sale is at least three years before your target exit date. Buyers and banks base valuations on 3-5 years of financial history, with recent performance weighted most heavily. Starting early gives you time to optimize your practice’s performance on paper, not just in a last-minute push.

2. Should you update your equipment? If you are 5-10 years from selling, strategic remodeling and equipment updates can be a wise investment. However, if your timeline is shorter, major capital expenditures rarely provide a dollar-for-dollar return. Focus only on essential upgrades, like digital X-rays and modern practice management software, that are now considered standard.

3. What about the practice real estate? Many practice owners own their building and consider keeping it as a rental property post-sale. We generally advise against this, especially when selling to a DSO. These groups may choose to relocate the practice at the end of a lease, leaving you with a highly specialized, and potentially empty, building.

Market Activity

The Raleigh dental market is seeing a steady flow of transactions. This activity is driven by both individual dentists and corporate buyers, each bringing a different dynamic to the table. Understanding these trends is key to positioning your practice effectively and anticipating the types of offers you may receive. Sellers who prepare for a structured, competitive process are best positioned to capitalize on the current market.

Individual Buyer Dynamics

Transactions between two doctors remain common. These sales are often focused on ensuring a good cultural and clinical fit to maintain continuity for patients and staff. Pricing for these deals typically ranges from 50% to 100% of the practice’s annual collections. The process can be more personal but may also depend heavily on the buyer’s ability to secure financing.

The DSO Approach

Group practices and DSOs are a driving force in the market. They value practices based on a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which can often result in higher enterprise values for profitable practices. An offer from a DSO is typically more complex, potentially including equity rollover and employment contracts. Their expert teams are there to serve their interests, which makes it important for you to have an experienced advisor on your side.

The Sale Process

Selling a practice is not a single event but a multi-stage process. Each phase has its own challenges and requires careful attention to detail. A misstep at any stage can jeopardize the deal or reduce your final proceeds. Running a structured process protects you from common mistakes and keeps the momentum moving toward a successful close. Here is a simplified look at the typical journey.

Understanding Your Practice’s Value

One of the first questions every practice owner asks is, “What is my practice worth?” The answer is more complex than a simple rule of thumb. While top-line revenue is a factor, sophisticated buyers are most interested in profitability and cash flow. A thorough valuation tells the true story of your practice s financial health and is the cornerstone of any successful sale.

The Old Rule of Thumb

Historically, many practices were valued based on a percentage of annual collections, often between 50% and 75% for a doctor-to-doctor sale. While this metric is easy to calculate, it fails to account for the practice’s actual profitability. Two practices with the same revenue can have vastly different overhead and take-home pay, and therefore, different values.

The Modern Standard: Adjusted EBITDA

Today, most group practices and corporate buyers value a practice based on a multiple of its Adjusted EBITDA. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of cash flow. We “adjust” it by adding back personal expenses run through the business or normalizing an owner’s salary to market rates. This reveals the practice’s true underlying profitability, which is what a buyer is purchasing. A profitable practice can command a valuation multiple of 5 to 7 times its Adjusted EBITDA, often resulting in a higher price than the old revenue-based rule of thumb.

Post-Sale Considerations

The transaction does not end the day the papers are signed. A successful transition ensures your financial goals are met while also protecting the legacy you have built with your staff and patients. Thinking through these post-sale elements ahead of time is critical for a smooth handover and your own peace of mind.

1. Your Future Role. Do you want to walk away completely, or would you prefer to continue working for a few years? Many buyers, especially DSOs, prefer the seller to stay on for a 1-3 year transition period to ensure continuity. This can be a great way to ease into retirement, but the terms of your employment contract must be carefully negotiated upfront.

2. Your Staff’s Well-Being. Your loyal staff is one of your practice’s most valuable assets. The transition to a new owner can be a time of uncertainty for them. Part of our role is to act as a matchmaker, finding a buyer whose culture and philosophy align with yours. This is the best way to ensure a stable and positive environment for your team long after you have left.

3. Your Patient Community. You have spent years building trust with your patients. A successful sale involves transferring that goodwill to the new owner. Finding a buyer who shares your approach to patient care ensures the community will continue to be well-served, preserving the reputation you worked so hard to build.