When you receive an offer for your dental practice, the document in front of you is rarely what it appears to be at first reading. A headline price is not a net price. An earn-out proportion is not a guaranteed amount. The exclusivity period is a commitment with commercial consequences. Understanding what an offer actually contains — and what questions to ask before responding — is one of the most valuable things you can do in the weeks after a bid lands.
This guide covers the anatomy of a dental practice offer, how to compare individual buyer and DSO offers on the right terms, where the headline figure erodes before cash reaches your account, how to evaluate earn-out structures, and how to respond constructively and commercially.
1. What a Dental Practice Acquisition Offer Contains
A formal offer for a dental practice — whether submitted in a heads of terms document, an offer letter, or a memorandum of understanding — typically covers six components. Each deserves careful attention.
Headline price. The total consideration the buyer is offering for the business. This is the number most sellers lead with when comparing offers, but it is the least useful number for that purpose. Headline price is a starting point, not an outcome. What matters is net proceeds, after costs, taxes, and any deferred component is risk-adjusted.
Completion payment. The amount payable at legal completion — the portion of the headline price that is not deferred. In a straightforward individual buyer transaction, this may be the entire consideration. In a DSO deal, it is the headline minus the earn-out. Understanding the precise composition and any conditions attached to the completion payment is essential before accepting any offer.
Earn-out. A deferred element of the price, payable over a specified period from completion, contingent on the practice meeting defined performance targets. Earn-outs are standard in DSO acquisitions and less common — but not absent — in individual buyer transactions. The earn-out figure in the offer is a target, not a guarantee, and the mechanism by which it is measured and paid deserves close scrutiny.
Exclusivity. A period during which you agree not to market the practice to, or negotiate with, other buyers. Exclusivity protects the buyer’s investment in legal and financial due diligence. For the seller, it removes optionality during that window. The offer will specify the duration; the question is whether that duration is appropriate given the complexity of the transaction.
Conditions precedent. The conditions that must be satisfied before the buyer is obliged to complete. These can include finance approval, satisfactory due diligence, CQC registration confirmation, and NHS contract novation. Conditions precedent carry real risk — if they are not met, the buyer is not obliged to proceed.
Transaction structure. Whether the sale is structured as an asset sale or a share sale (where the practice is held in a company). This has significant tax consequences for both parties and affects how the price is allocated across the practice’s components. The offer should state the proposed structure, though this is sometimes negotiated post-acceptance.
2. Individual Buyer Offers vs DSO Offers
One of the most common errors when evaluating dental practice offers is comparing an individual buyer offer directly against a DSO offer on headline price. These are structurally different propositions, and a headline-to-headline comparison produces a misleading answer.
Individual buyer offers typically carry a lower EBITDA multiple than DSO offers. The buyer is usually a single dentist purchasing one practice, often with bank finance, and their capacity to pay is constrained accordingly. The typical structure is clean: 100% of consideration at completion, no earn-out, and a relatively straightforward legal process. The offer is close to what you actually receive.
DSO offers typically carry a higher headline multiple, reflecting the DSO’s access to cheaper capital, its ability to spread fixed costs across multiple sites, and the premium it places on acquiring good practices in target geographies. However, 25–35% of the consideration is usually deferred into an earn-out, payable over twelve to thirty-six months from completion and subject to EBITDA or UDA performance targets. The headline figure is not the completion payment; the earn-out is contingent; and the obligations attached to earning it — continued clinical sessions, management involvement, and integration support — represent a real cost.
The right comparison is risk-adjusted expected receipt, not headline versus headline. When a DSO offers £1.2 million with 30% in earn-out and an individual buyer offers £900,000 at completion, the relevant question is not “£1.2m vs £900k” — it is “what is the realistic probability-weighted value of the DSO earn-out, and what is the cost of the obligations I must discharge to earn it?” Modelling both offers on this basis often narrows the gap substantially, or in some cases reverses it.
For sellers who place high value on a clean exit, certainty of receipt, and freedom from transition obligations, an individual buyer offer at a lower headline may represent a superior economic outcome.
3. Headline Price to Net Proceeds: The Gap
Once you have an offer in hand, the next critical exercise is calculating the net proceeds — the cash you will actually receive after costs and taxes. The gap between headline and net is consistently larger than sellers expect.
Broker fee. If you have engaged a broker on a success-fee basis, the fee is typically 1–2% of the headline price, payable at completion. On a £1 million practice sale, this is £10,000–£20,000. On a £2 million sale, £20,000–£40,000.
Legal costs. Your solicitor’s fees for the sale will typically run to £10,000–£30,000 or more, depending on transaction complexity, the quality of information disclosed in due diligence, and how hard-fought the SPA negotiation is. DSO deals with complex earn-out structures and extensive warranties tend toward the top of that range.
Accountancy costs. Your accountant’s fees for financial due diligence support, deal structuring, and tax planning will add further cost — typically £3,000–£8,000 for a straightforward transaction, more where the corporate structure is complex.
SDLT on property. Where freehold property is being transferred as part of the deal, Stamp Duty Land Tax is payable by the buyer. The allocation of the purchase price across business assets and property affects both parties’ tax positions; take advice on structuring early.
Capital Gains Tax and Business Asset Disposal Relief. The gain realised on the sale is subject to CGT. Business Asset Disposal Relief (BADR) can reduce the effective CGT rate on the first £1 million of qualifying lifetime gains. Whether your disposal qualifies depends on the transaction structure and whether the qualifying conditions — including the ownership period and trading company criteria — are met. Confirm BADR eligibility with your accountant before accepting any offer, as the answer materially affects net proceeds.
The earn-out and Marren v Ingles. For any deal involving an earn-out, there is an additional and commonly overlooked tax point. Under the principle established in Marren v Ingles [1980], the right to receive a future earn-out payment is itself a capital asset, valued at the date of the original disposal. This means that at completion, CGT is payable on a deemed value of the earn-out right — even though the actual earn-out cash has not yet been received. Where BADR applies, it applies to the full disposal at completion, including the earn-out right. Earn-out receipts received in subsequent years are then taxed as proceeds from disposal of that right at the standard CGT rate applying at the time of receipt.
The practical consequence: if your earn-out right is valued at £250,000 at completion, you will owe CGT on that amount in year one, funded from your completion payment. Ensure the completion payment is sufficient to cover this liability before accepting the deal structure.
4. Evaluating the Earn-Out
For any offer containing a deferred element, the earn-out terms deserve the same attention as the headline price. An earn-out figure on paper is not cash in the bank.
How is EBITDA defined? The single most important drafting question. EBITDA for earn-out purposes must be defined at heads of terms stage, not left to SPA drafting. If the earn-out is calculated on the practice’s reported EBITDA post-completion, and the buyer controls the cost base, the earn-out can be eroded by DSO integration costs, central overhead recharges, or supplier changes that reduce reported profitability. A properly defined earn-out EBITDA freezes the cost structure at completion and excludes buyer-imposed costs not present at the point of valuation.
What is the target — maintainable or growth? Some buyers set the earn-out target at the practice’s current maintainable EBITDA. Others set it at a projected growth figure based on their acquisition business plan. A target set above current maintainable earnings is not a conservative earn-out; it is a partial deferral of the purchase price contingent on growth the buyer expects to drive. Understand whether the target is achievable on the current cost base without material improvement, or whether it requires performance the practice has not yet demonstrated.
Buyer-side deduction risk. Cost items the buyer introduces post-completion — new software subscriptions, integration project costs, rebranding, staff changes — can be allocated in ways that reduce earn-out EBITDA. Non-interference obligations must expressly prevent the buyer from imposing cost increases that were not present at completion and were not contemplated in the agreed business plan at heads of terms.
Collar or minimum. A collar is a minimum earn-out payment you receive regardless of actual performance, provided the practice has not experienced a material adverse change attributable to the seller. A collar converts part of the deferred consideration from conditional to substantially certain. It is not a standard term in first-draft offers but is negotiable — particularly where you can demonstrate that the practice’s earnings are robust and well-evidenced. Even a collar at 50% of the earn-out target significantly improves the risk-adjusted economic value of the deal.
5. Exclusivity and Conditions Precedent
Exclusivity duration. Four to eight weeks is a reasonable exclusivity period for a dental practice transaction. Longer periods — three months or more — are not in the seller’s interest, and buyers will often request them. During exclusivity you cannot meaningfully advance discussions with other buyers. If the original buyer withdraws after an extended exclusivity period, you have lost several months of marketing momentum. Negotiate exclusivity to the minimum that gives the buyer a genuine opportunity to complete due diligence and progress the legal process.
Conditions within the buyer’s control. Finance approval is the most common buyer-controlled condition. If the buyer has not secured finance at the point of submitting the offer, they are asking you to grant exclusivity and pause other negotiations while they resolve a condition entirely within their own hands. Ask what stage financing is at; a buyer with finance in principle is materially different from one who has not yet approached a lender.
Third-party conditions. CQC registration for the incoming buyer, and NHS contract novation, involve third parties outside both buyer’s and seller’s control. CQC applications for new providers can take several months; NHS commissioners have their own timelines for novation approvals. Both can sit on the critical path of the transaction. Understand the expected timeline for each condition, build in adequate long-stop provisions, and ensure the sale agreement contains appropriate protections if a third-party condition is not met through no fault of either party.
Long-stop provisions. A long-stop date is the date by which all conditions must be satisfied or waived, failing which either party may withdraw. The long-stop should be realistic — long enough for third-party conditions to be met in the ordinary course, short enough that you are not locked into a prolonged conditional period with a buyer who is not actively progressing.
6. How to Respond to a Dental Practice Offer
Receiving an offer creates a negotiating moment. Your response sets the terms of the negotiation that follows. The principal options are:
Accept. Where the offer is strong, the buyer credible, and the terms fair, acceptance on the key commercial points — while reserving detailed drafting to the legal process — is a legitimate response. Accepting heads of terms is not an unconditional legal commitment, but it establishes the commercial framework for the deal.
Counter on price. Where the headline is below your expectations, a counter should be specific and anchored in valuation evidence. A counter is stronger when supported by reference to recent comparable transactions, the practice’s financial performance, or a formal valuation. “We were looking for more” is not a counter; “on the basis of an X× multiple of maintainable EBITDA of £Y, we would expect a price of £Z” is.
Counter on earn-out proportion. Where the headline is acceptable but the earn-out fraction is too high, counter on the completion vs earn-out split rather than total price. Shifting 10% of the consideration from earn-out to completion reduces your risk without reducing the buyer’s total commitment, which can make the counter easier for the buyer to accept.
Negotiate the earn-out EBITDA definition. Before heads of terms are signed is the most important moment to agree how the earn-out will be calculated. If you cannot get comfortable with the EBITDA definition at this stage — how costs are allocated, what deductions the buyer can make, whether central overhead charges are excluded — the earn-out is not what the headline figure implies.
Request a collar. Propose a minimum earn-out payment, structured as a floor, payable regardless of EBITDA performance provided no material adverse change attributable to the seller has occurred. Even a partial collar at 40–50% of the earn-out target materially changes the risk profile of the deferred consideration.
Negotiate exclusivity duration. Counter a three-month exclusivity request with four to six weeks. Frame it as reasonable given a well-organised due diligence process and a structured data room. The buyer who genuinely intends to proceed can complete due diligence within six weeks; the buyer who needs three months may have reservations that exclusivity alone will not resolve.
Find out what your dental practice is worth →
For a complete guide to the process of selling, see how to sell your dental practice. For context on how valuations are calculated before an offer arrives, see dental practice valuation explained.
Frequently Asked Questions
What should a dental practice acquisition offer include?
A complete offer should specify the headline price, the completion payment (the amount payable at legal completion), the earn-out structure (if any), the exclusivity period, the conditions precedent the buyer requires to be satisfied before completing, and the proposed transaction structure (asset or share sale). Each of these elements carries commercial and legal implications that affect your net proceeds and the risk profile of the deal.
Is the headline price in a dental practice offer what I will actually receive?
No. From the headline, you should deduct broker fees (1–2%), legal costs (£10,000–£30,000+), accountancy costs, and CGT at the applicable rate after any BADR reduction. Where the offer includes an earn-out, the Marren v Ingles principle means CGT is payable on the deemed value of the earn-out right at completion — before earn-out cash is received. Net proceeds are typically materially lower than the headline figure.
How do I compare a DSO offer with an individual buyer offer?
Compare on risk-adjusted expected receipt, not headline price. A DSO offer with a higher headline typically defers 25–35% into a contingent earn-out; an individual buyer offers 100% at completion. The right comparison discounts the earn-out by the probability of full delivery, subtracts the cost of obligations required to earn it, and compares the result against the individual buyer’s completion payment net of costs. The gap between headline figures is often substantially narrower than it first appears.
What is a reasonable exclusivity period for a dental practice sale?
Four to eight weeks is reasonable for most dental practice transactions. Exclusivity longer than eight weeks ties you to a single buyer while other options are unavailable. Where third-party conditions such as CQC registration or NHS novation are on the critical path, exclusivity extensions tied to specific milestones can be agreed — but open-ended exclusivity of three months or more is rarely in the seller’s interest.
What is a collar in an earn-out, and should I request one?
A collar is a contractual minimum earn-out payment — typically expressed as a percentage of the total earn-out — payable regardless of actual EBITDA performance, subject to no material adverse change attributable to the seller. It converts part of the deferred consideration from fully contingent to substantially certain. It is not a standard term in first-draft DSO offers, but it is negotiable — particularly where the practice’s maintainable EBITDA is well-evidenced and the earn-out target is conservative.