If you've owned a dental or medical practice for any length of time, you've likely received an unsolicited offer to sell. Many of these inquiries come from Dental Service Organizations (DSOs) or Medical Service Organizations (MSOs), often backed by private equity or larger healthcare organizations.

For some practice owners, selling provides an opportunity to realize the value they've built while continuing to practice without managing the day-to-day business. For others, it means giving up more control than anticipated or agreeing to long-term contractual obligations.

Before considering any offer, it's important to understand how these transactions work and the legal commitments they create.

What Is the Difference Between a DSO and an MSO?

A Dental Service Organization (DSO) provides non-clinical business services to dental practices, including payroll, billing, marketing, recruiting, accounting, human resources, and technology.

A Medical Service Organization (MSO) serves the same role for physician practices and other healthcare providers.

In both structures, healthcare providers remain responsible for patient care and clinical decision-making, while the DSO or MSO manages business operations. These arrangements are designed to comply with state laws governing professional practice ownership while allowing practices to benefit from centralized administrative support.

Why Are DSOs and MSOs Buying Practices?

Healthcare consolidation has accelerated over the past decade. Buyers seek established practices that can benefit from shared administrative resources, stronger purchasing power, and operational efficiencies.

For practice owners, selling may provide:

• Immediate liquidity
• Reduced administrative responsibilities
• Access to additional business resources
• A transition toward retirement
• The opportunity to continue practicing as an employee

Whether selling makes sense depends on your financial goals, career plans, and desire to remain independent.

How Do DSO and MSO Transactions Work?

Selling to a DSO or MSO involves much more than transferring ownership of your practice. Most transactions include several agreements that govern the relationship after closing, such as:

• Letter of Intent (LOI)
• Purchase Agreement
• Employment Agreement
• Management Services Agreement
• Non-Compete or Restrictive Covenant
• Earn-Out or Rollover Equity Documents

Because these agreements work together, the purchase price is only one part of the overall transaction. Employment obligations, compensation structure, future equity, and post-closing restrictions can significantly affect the value of the deal.

Asset Sale vs. Equity Sale

Most acquisitions are structured as either an asset purchase or an equity purchase.

Asset Purchase

The buyer purchases selected assets, such as equipment, goodwill, patient records (where permitted), and certain contracts, while some liabilities remain with the seller.

Equity Purchase

The buyer acquires ownership of the practice entity itself, including its assets and liabilities.

Each structure carries different legal and tax consequences, making early coordination with your attorney and CPA essential.

What Do Buyers Look For?

Although every buyer has different investment criteria, most evaluate similar factors, including:

• Consistent revenue and profitability
• Strong patient retention
• Efficient operations
• Stable provider team
• Modern technology
• Favorable lease terms
• Opportunities for future growth

Practices with organized financial records and efficient operations generally attract stronger offers and experience smoother due diligence.

Important Legal Issues to Consider

Many sellers focus primarily on purchase price. In reality, the legal terms often have just as much impact on the value of the transaction.

Some of the most important provisions include:

• Employment agreements
• Non-compete and non-solicitation clauses
• Purchase price adjustments
• Earn-out formulas
• Rollover equity
• Escrow holdbacks
• Indemnification obligations
• Representations and warranties

These provisions can affect your compensation, future employment, and financial risk long after closing.

Why the Letter of Intent Matters

One of the most common mistakes practice owners make is signing a Letter of Intent before consulting legal counsel.

Although portions of an LOI may be non-binding, it often establishes the framework for the entire transaction, including purchase price, deal structure, exclusivity, employment expectations, due diligence timelines, and closing conditions.

Once those expectations are established, changing them later can become much more difficult.

Why Legal Counsel Matters

Selling a healthcare practice is often one of the largest financial transactions of a provider's career.

Experienced healthcare counsel can help review Letters of Intent, negotiate purchase agreements, evaluate employment contracts, analyze restrictive covenants, and identify legal risks before they become costly problems.

At Dental & Medical Counsel, we represent dentists, physicians, and healthcare providers throughout every stage of DSO and MSO transactions. Whether you've received your first acquisition offer or are negotiating with multiple buyers, involving legal counsel early can help protect both your transaction and your future.

If you're considering selling your practice, contact our team before signing any transaction documents.

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Frequently Asked Questions

Q: What is a Dental Service Organization (DSO)?

A: A DSO provides non-clinical business services—such as billing, payroll, marketing, technology, and human resources—to dental practices while dentists continue making all clinical decisions.

Q: What is the difference between a DSO and an MSO?

A: A DSO supports dental practices, while an MSO provides similar management services to physician and medical practices. Both are designed to separate clinical care from business operations while complying with state ownership laws.

Q: Should I sell my practice to a DSO or MSO?

A: The answer depends on your financial objectives, retirement plans, willingness to become an employee, and long-term professional goals. Every transaction should be evaluated individually.

Q: What is a Letter of Intent (LOI)?

A: An LOI outlines the proposed terms of the transaction before definitive agreements are negotiated. While some provisions are non-binding, others—such as exclusivity and confidentiality—may be legally binding.

Q: What do buyers look for when acquiring a practice?

A: Buyers typically evaluate profitability, patient retention, operational efficiency, provider stability, lease terms, technology, and growth potential.

Q: How long does a DSO or MSO acquisition take?

A: Most transactions close within three to six months after the Letter of Intent is signed, although timing varies depending on due diligence and negotiations.

Q: Can I continue practicing after I sell?

A: Yes. Most acquisitions include an employment agreement allowing the seller to continue practicing for a negotiated period. Those terms should be reviewed carefully before signing.

Q: Should I hire a healthcare attorney before signing an offer?

A: Yes. Consulting an experienced healthcare attorney before signing a Letter of Intent typically provides the greatest opportunity to negotiate favorable terms and avoid costly legal issues later in the transaction.

About the Author

At Dental & Medical Counsel, PC, we understand navigating the legal process can be tricky. We believe every dentist, optometrist, and doctor deserves the best advice and service, so they can focus on what they do best: treating their patients. We make their lives easier by providing expert guidance, so they can focus on their personal and professional aspirations. We are healthcare attorneys.

About Ali Oromchian, Esq.

Your Dental, Optometry, Healthcare Lawyer

Ali Oromchian, JD, LL.M., is the founding attorney of the Dental & Medical Counsel, PC law firm, and is renowned for his expertise in legal matters

In addition to being a healthcare lawyer for almost 20 years, Ali is also a renowned speaker throughout North America, on topics such as practice transitions, employment law, negotiation strategies, estate planning, and more! Ali has helped thousands of doctors realize their professional goals and looks forward to aiding you in navigating the legal landscape.