The solo practice premium: why independents are worth more per chair

Private equity firms are paying 9x EBITDA for group practices. That same metric for independent dental practices is 11x to 13x. Why are they paying 20 to 40 percent more for the thing they're supposed to consolidate?

Two reasons. First, an independent practice runs at 35 to 42 percent EBITDA margins because the doctor owns it and cares about profit. A group practice runs 22 to 28 percent because every location is staffed for scaling, not optimization. The independent practice's profit is real. The group practice's profit is a story told in forecasts.

Second, when PE acquires an independent, they inherit a doctor-owner who stays. When they acquire a group, they inherit a CEO who leaves in 18 months and takes key relationships with them. The independent solo practitioner is the asset. The group is a revenue machine with management risk.

This tells you something important: if you're running solo and your practice is profitable, you're sitting on serious valuation. If you're thinking about selling, don't get distracted by DSO roll-up offers at 6x. The market will pay more if the numbers are clean. Document everything. Get a broker. The premium for independence is real and growing.

For the DSO inside a group: You're optimizing the wrong thing. You're competing for consolidation margin, not for ownership value.