Key Takeaways For Atlanta Sellers
- Most Atlanta DSO deals split the price into 3 parts: cash at close, rollover equity, and earnout. Only the cash portion is guaranteed on day one.
- Cash-at-close percentages can vary by buyer type and practice profile. Regional roll-ups often pay higher cash, while large private equity platforms usually include more rollover equity.
- Debt payoff, escrow, transaction fees, and working capital adjustments all reduce the cash you receive at closing compared with the headline enterprise value.
- Atlanta’s competitive DSO market can improve cash terms, but sellers still need to weigh rollover equity risk and the tax impact of any earnout tied to personal production.
- McLerran & Associates helps Atlanta practice owners increase upfront cash through competitive bidding and CPA-led financial analysis that supports stronger negotiations.
Get a confidential read on your Atlanta practice’s cash-at-close potential.
What Percentage Of A DSO Deal Is Paid In Cash At Closing?
The cash-at-close percentage in a DSO deal varies by buyer type, practice profile, and market conditions. Formal DSO acquisitions typically pay a majority of headline value in cash at close. Regional roll-up buyers, which are smaller consolidators with less capital depth, may offer a higher cash percentage because they do not usually structure large equity and earnout provisions. Platform private equity acquisitions, which target practices with substantial EBITDA, can offer the highest headline multiples but often the lowest cash-at-close percentage, because they rely on meaningful rollover equity to align the seller with a future exit.
A significant portion of a DSO deal can be paid in equity rather than cash. A seller who focuses only on the headline number can easily overestimate what lands in their account at close. Where any specific deal lands depends on the practice’s characteristics, the buyer’s capital structure, and the competitive tension created during the sale process. To see how those percentages translate into actual dollars, review the example below.
A Dollar-Denominated Worked Example For An Atlanta Practice
This example is illustrative only. It does not represent a valuation of any specific practice, and no particular multiple or outcome is guaranteed. It simply shows how the math can work in a typical mid-market Atlanta DSO transaction.
Consider an Atlanta general dentistry practice generating $400,000 in normalized EBITDA (earnings before interest, taxes, depreciation, and amortization, which is the buyer’s measure of operating profit). At a 6x multiple, which sits within the range commonly applied to established single-location practices, the enterprise value would be $2.4 million.
A typical deal structure at that value might allocate roughly:
- Cash at close: about $1.4 million paid immediately
- Rollover equity: about $700,000 in DSO platform units, which remain illiquid until a future recapitalization
- Earnout: about $300,000, contingent on hitting defined performance targets
The cash component is not taxed as a single lump. Goodwill is generally taxed at the federal long-term capital gains rate plus the net investment income tax, while other asset classes can carry different rates. Georgia also adds a state income tax. Because each asset class is taxed differently, the way the purchase price is allocated across them changes your total tax bill. That allocation often becomes one of the most consequential negotiations in the deal.
The earnout carries additional tax risk. If it is tied to your continued personal production and requires your employment to receive payment, the IRS may treat it as ordinary compensation income rather than capital gain. That treatment can increase the effective tax rate on the earnout significantly. A qualified tax advisor should review any proposed earnout structure before you sign.
Purchase Price Vs. Cash In Your Bank Account On Closing Day
The gap between the headline purchase price and the day-one deposit can surprise many sellers. Several deductions sit between the enterprise value in the letter of intent and the wire that arrives at close.
The buyer’s proceeds bridge works as follows: Normalized EBITDA multiplied by the selected multiple equals enterprise value. Enterprise value minus net debt, plus or minus a working capital adjustment, minus escrow and holdbacks, and minus rollover equity equals estimated cash at close.
In plain terms, the deductions that reduce your day-one deposit can include:
- Debt payoff: Practice loans, equipment financing, and lines of credit are typically paid off at close from the proceeds.
- Escrow and holdbacks: Buyers commonly hold back roughly 5% to 15% of enterprise value in escrow for 12 to 24 months to cover post-close indemnification claims. Smaller deals under $25 million typically sit at 10% to 15%, while larger deals between $100 million and $250 million sit at 5% to 8%.
- Transaction fees: Advisory, legal, and accounting fees reduce net proceeds.
- Rollover equity: The equity portion is not paid in cash. It is issued as units in the DSO platform.
- Working capital adjustments: If the practice’s accounts receivable or cash balance at close differs from the agreed target, the purchase price is adjusted.
A simple mental formula can help you estimate your day-one deposit:
- Start with the headline enterprise value.
- Subtract the rollover equity and earnout, since those are not paid in cash.
- Subtract debt payoff and transaction fees.
- Subtract escrow.
What remains is the approximate gross cash at close before taxes.
For a deeper look at how Atlanta DSO deal structures are constructed, see Atlanta DSO Acquisitions: 2026 Deal Structures & Outcomes.
How Atlanta Market Competition Affects Your Cash-At-Close Offer
Atlanta is one of the densest DSO acquisition markets in Georgia, concentrating the majority of the state’s DSO activity. More than 200 supported practices operate statewide, and established DSOs compete intensely for the same suburban growth corridors. Multiple national platforms, regional roll-ups, and private equity-backed groups actively pursue practices in the metro area. That mix creates competitive tension, which can be one of the most reliable ways to move the cash-at-close percentage upward.
Atlanta’s buyer density also creates a challenge for unrepresented sellers. Cash that buyers previously paid upfront in DSO deals is increasingly being structured as promissory or maintenance notes, which shifts more risk back to sellers. Buyers are also asking for longer employment commitments and sustained performance requirements. This post-2022 shift reflects the elevated cost of capital, which has made DSO buyers more conservative about guaranteed upfront cash and more reliant on earnouts and equity.
The table below highlights the key tradeoff. A DSO offer often carries a higher headline value but splits payment across cash, rollover equity, and earnout. A private dentist buyer usually pays the full price in cash at close. Focus first on the “Cash at close” row, where the two paths differ most. These figures are directional ranges drawn from market data and are not guarantees of any specific outcome.
| Attribute | DSO Buyer (Atlanta) | Private Dentist Buyer (Atlanta) |
|---|---|---|
| Valuation basis | Multiple of normalized EBITDA (typically a range for add-on acquisitions) | Multiple of seller’s discretionary earnings (SDE), typically a lower range |
| Cash at close | A majority of deal value | Typically 100% of purchase price (financed by lender) |
| Rollover equity / earnout | Meaningful rollover equity; smaller earnout typical | Rarely includes rollover equity; may include a seller note of a portion |
For a side-by-side analysis of these two paths in the Atlanta market, see DSO Vs. Private Equity: Selling Your Atlanta Dental Practice.
Rollover Equity Vs. Earnout: What The Non-Cash Portion Is Really Worth
Rollover equity and earnouts represent potential future value rather than cash. Evaluating them calls for a different lens than evaluating the cash component.
For rollover equity, key questions include whether the DSO’s overall business is profitable, whether revenue is still growing at existing offices, the strength of the management team, and the private equity backer’s history of successful exits. Rollover equity can be issued at the practice entity level as joint-venture equity, which pays through distributions of practice cash flow, or at the parent company level as holding-company equity, which pays at a future recapitalization of the entire platform. Joint-venture equity can offer a higher floor and more predictable distributions. Holding-company equity can offer a higher ceiling but no interim distributions and a payout that depends entirely on a future sale.
Preferred equity in a DSO platform carries a liquidation preference, meaning it is repaid first, with its accrued return, before common equity receives anything. If the platform sells for less than the preferred stack, the selling dentist’s rolled equity can return nothing even if the transaction appears successful in a press release.
For earnouts, the metric definition often matters more than the percentage. Post-close DSO management fees, allocated overhead, and inter-company charges can reduce the seller’s reported EBITDA by a meaningful percentage depending on the group. That reduction can directly erode earnout payments if the calculation method was not negotiated in advance. Non-punitive earnout terms, such as pro-rata provisions that pay a proportional amount for near-misses on targets or a later start date that allows for integration disruption, can meaningfully improve the expected value of this component.
How Practice Characteristics Move The Cash Percentage
Practice-specific characteristics can shift the cash-at-close percentage within the market range. These factors often interact, so buyers look at the full picture rather than any single metric.
Provider dependence is one of the clearest drivers. Practices where the owner performs a substantial portion of total production may face valuation reductions, and provider risk has been one of the top reasons DSOs stepped away from transactions in recent years. High owner dependence tends to push value into earnout, escrow, or employment-linked conditions instead of guaranteed upfront cash.
Hygiene retention signals recurring, transferable patient revenue. DSOs often prioritize practices where hygiene revenue represents a meaningful percentage of total production because hygiene revenue is highly recurring and less dependent on the owner-dentist. A strong hygiene department can support a cleaner cash-at-close structure by reducing perceived transition risk.
Payer mix affects reimbursement durability and collections predictability. DSOs usually favor practices with commercial PPO or fee-for-service payer mixes over Medicaid-heavy practices. Those mixes can command higher multiples because they are easier for a new owner to step into and maintain.
Single-location vs. multi-location structure shapes the buyer’s integration plan. Regional dental groups with multiple locations often trade at significant premiums to single-location practices. A DSO can plug into their existing infrastructure instead of building from scratch. Multi-location practices can also attract more buyer types, which increases competitive tension and can improve cash-at-close terms.
For a broader look at how Atlanta DSO buyers evaluate practices, see Best DSOs To Sell Your Dental Practice In Atlanta.
Questions To Ask Before Signing A Letter Of Intent
Before granting exclusivity to any buyer, an Atlanta practice owner can benefit from clear answers to questions such as:
- What percentage of the total consideration is cash at close, and what specific deductions sit between enterprise value and the closing wire?
- What are the earnout metrics, and are they based on practice-wide EBITDA or collections, or on my personal production? Are there pro-rata provisions for near-misses?
- At what level is the rollover equity held, the practice entity or the parent holding company, and what governance rights, dilution protections, and information rights come with it?
- What are the post-close employment terms, including duration, compensation structure, and clinical autonomy provisions?
- How is the buyer capitalized, and what is the private equity sponsor’s track record of recapitalizing platforms on schedule?
Material business issues are usually best negotiated and reflected in the letter of intent rather than left for the definitive documents stage. Once exclusivity is in place, a seller’s flexibility to modify economic or structural terms often decreases.
Why McLerran & Associates
McLerran & Associates is the nation’s largest dental-specific sell-side M&A advisory and brokerage firm, and one of the few that runs both transition paths, doctor-to-doctor and DSO affiliation, in roughly equal measure. That dual-path capability matters for Atlanta practice owners because it supports a genuine side-by-side comparison that single-lane brokers cannot provide.
The firm’s track record includes a substantial number of successful practice sales, significant closed transaction volume, and thousands of practices evaluated. Its transaction rate compares favorably to an industry norm, which can reflect the quality of the firm’s valuation work and the competitive process it runs on behalf of sellers.
Every engagement begins with a CPA-led, diligence-grade EBITDA analysis. This level of work controls the narrative around profitability when a buyer’s quality-of-earnings team reviews the numbers. Because the homework is completed before the deal goes to market, McLerran’s valuations tend to hold up under buyer scrutiny and deals are less likely to be re-traded at the finish line.
From that foundation, McLerran focuses on creating competition. Its structured, auction-like bid process typically runs for a defined period and generates multiple offers from a vetted pool of well-qualified buyers. Clients often see higher valuations than owners who sell alone, and the buyer pool is pre-vetted, with poorly run DSOs removed before they reach the table.
McLerran is sell-side only, so its incentives are aligned entirely with the seller.
The Atlanta office is led by Matt Sutton, who also covers the Southwest. Additional offices operate in Cleveland (led by Justin Klingshim), Northern Virginia (led by Andrew Kobylski), Los Angeles (led by Steven Au), and Phoenix (led by Brian Carroll, covering the Mountain West).
For Atlanta practice owners who are not yet ready to commit to a sale, the McLerran M&A Summit (October 29–30, 2026) offers a no-pressure way to get educated before deciding. Attendees receive 4 CE credits and a complimentary practice valuation.
For a closer look at how long the DSO sale process takes in Atlanta, see How Long To Sell Your Dental Practice To A DSO In Atlanta.
Talk to the sell-side team that runs both transition paths.
Frequently Asked Questions
How Has DSO Cash-At-Close Shifted Since 2022?
The post-2022 environment has moved toward less guaranteed upfront cash and heavier use of earnouts and equity. The primary driver is the cost of capital. Elevated interest rates have increased the cost of the debt DSO platforms use to fund acquisitions, which has made buyers more conservative about the cash they commit at close. Sellers who entered the market in earlier years often received more favorable cash-at-close percentages than sellers in more recent years. In addition, some DSO platforms that expanded aggressively during the low-rate era have struggled to recapitalize on schedule, which has made the rollover equity component of those deals worth less than sellers anticipated. For Atlanta sellers today, evaluate the cash-at-close percentage you are offered against the current market range, not against deals completed 2 or 3 years ago. Competitive tension among multiple buyers remains one of the most reliable ways to improve that percentage.
Can I Get A Mostly-Cash Deal In Atlanta?
A higher cash-at-close percentage, toward the upper end of the range, can be achievable in Atlanta. The outcome depends on the practice’s characteristics and the buyer type. Regional roll-up buyers, which are smaller consolidators with less capital depth, tend to offer higher cash-at-close percentages because they usually do not structure large rollover equity provisions. Practices with low owner dependence, strong hygiene retention, a commercial PPO or fee-for-service payer mix, and clean, documented financials are more likely to attract offers at the higher end of the cash-at-close range. Practices with high owner dependence or concentrated production in the departing dentist are more likely to see buyers push value into earnout and escrow instead of guaranteed cash. Running a competitive process among multiple buyers can be one of the most effective ways to improve the cash-at-close percentage.
What Happens To My Rollover Equity If The DSO Struggles?
Rollover equity in a DSO platform is a minority, illiquid position that usually sits below the sponsor’s preferred capital in the capital structure. If the DSO struggles, whether due to integration problems, excessive debt, or an inability to recapitalize at a favorable valuation, the rolled equity can be worth significantly less than its stated value at close or, in a worst case, nothing at all. Preferred equity holders, including the private equity sponsor, are paid first at any exit event. If the platform sells for less than the total preferred stack, common equity holders, which typically include the selling dentist, receive nothing. This risk is real. There are documented cases of DSO platforms that have failed to recapitalize on schedule or have experienced significant equity dilution through subsequent capital raises. Before accepting a significant rollover equity position, sellers can benefit from evaluating the DSO’s profitability, debt levels, management team, and the private equity sponsor’s track record of successful exits. An advisor who vets buyers like investments and has blacklisted poorly run DSOs can provide meaningful protection.
How Do I Compare A DSO Offer To A Private-Buyer Offer?
The comparison works best when both offers are converted to a common unit, such as estimated net cash over a defined time horizon after taxes. As the comparison table showed, a private dentist buyer usually pays the full price in cash at close, with no rollover equity or earnout. A DSO offer may carry a higher headline enterprise value but deliver less cash on day one, with a portion deferred into rollover equity and earnout. To compare them fairly, you can model the after-tax net on the cash component of each offer, assign a realistic probability-weighted value to the rollover equity and earnout, and factor in the post-close employment terms, including compensation and duration, which affect your total economic outcome over the years following the sale. McLerran & Associates produces multi-year, multi-structure financial forecasting that quantifies real after-tax proceeds across deal structures and time horizons, so Atlanta practice owners can make this comparison with fuller information.
Conclusion
The headline valuation number a DSO presents to an Atlanta practice owner is a starting point for analysis rather than a measure of what lands in the bank. Cash at close, rollover equity, and earnout are three different components with different certainty levels, tax treatment, and risk profiles. Understanding how the headline number breaks into those pieces can be one of the main factors in evaluating whether a DSO offer fits the Atlanta market.
In a market where DSO buyers negotiate deals every week and many sellers transact once in a career, competitive tension among multiple qualified buyers can be a powerful tool for improving upfront cash. McLerran & Associates is a dental-only sell-side advisor built to create that tension through a structured, auction-like process, CPA-led EBITDA analysis, and a vetted buyer pool.
Atlanta practice owners with a DSO offer in hand, or expecting one, can benefit from understanding what that offer is actually worth before responding.
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