When Your Dental Partner Wants Out: Buy Them Out or Sell Together?
The conversation is almost never a surprise by the time it happens.
Usually there were months of signals. Fewer days.
Less interest in the equipment decision. A slightly different tone about the five-year plan.
Then one afternoon your partner says they are thinking about winding down, and a question you had been avoiding becomes the only thing on the agenda.
Do you buy them out, or do you both sell?
I have watched this go well and go badly, and the difference is rarely about the relationship. It is about arithmetic that most partners have never actually run.
Key takeaways
- A buyout means taking on debt to buy an asset you already partly control. That is a fundamentally different transaction from selling, and its merits depend almost entirely on your age.
- The valuation you use internally should be the real one. Partners routinely negotiate off a number neither of them has tested against the market, and one of them loses.
- Selling together usually produces a higher price per share than a buyout does. Two-doctor practices attract more competitive interest than a single-doctor practice does.
- Your timelines are the deciding variable. If you are within five years of your own exit, funding a buyout is often the worst of the available options.
- Deadlock is the expensive outcome. Practices where partners cannot agree tend to drift, and drifting practices lose value in ways that are hard to recover.
Should I buy out my dental partner or sell the practice together? It depends primarily on how far you are from your own exit.
With ten or more years ahead and comfortable debt capacity, a buyout can be worthwhile. Within about five years of retiring yourself, selling together generally produces a better outcome, because a two-doctor practice attracts stronger competitive interest than either half would separately.
Start with what the practice is actually worth
Before you can decide anything, both of you need a real number. Not the number in the partnership agreement, which was probably written a decade ago using a formula that no longer reflects the market.
Not a percentage of collections, which is not a valuation method.
Adjusted EBITDA is what the practice earns in pure operating profit after paying market-rate dentists to do the clinical work you and your partner currently do yourselves. Multiply that by a market multiple and you have enterprise value.
That definition matters enormously in a partner buyout, because two owner-dentists producing heavily can make a practice look far more profitable than it is once both are replaced at market rates.
Multiples scale with size and buyer type. A single-location practice bought as a tuck-in sits at the lower end.
A two-to-four-doctor practice with associate-led production sits meaningfully higher. Which brings up the first thing partners get wrong.
A two-doctor practice is worth more than twice a one-doctor practice. Buyers pay for depth. A practice that does not depend on any single person is a lower-risk acquisition, and it prices accordingly.
So if you buy your partner out and then sell later as a single-doctor practice, you may well sell into a lower multiple than the one you could have accessed together.
That is the arithmetic nobody runs, and it can easily exceed the entire benefit of owning 100% instead of 50%.
The buyout case
Buying out your partner makes sense in a reasonably narrow set of circumstances.
You have a long runway. Ten or more years of practice ahead means time to service the debt, capture the additional profit share, and still sell later on your own timetable.
The practice can carry the debt comfortably. Not theoretically. Run it against a realistic year, including the cost of replacing your partner’s clinical production, which is a cost that arrives immediately and is frequently underestimated.
You genuinely want to keep running it. Sole ownership means every administrative and staffing burden that was previously shared is now yours. Owners who buy out a partner while already stretched tend to regret it inside two years.
The price is right. A partner leaving is often willing to accept a valuation below market for a clean, fast exit with no diligence. That discount is the strongest argument for a buyout, and it is real.
What makes a buyout go wrong is usually the combination of age and leverage. Taking on seven-figure debt at 58 to buy a half share you will sell at 63 rarely improves the outcome.
You service the loan for five years, absorb your partner’s production gap, then sell a single-doctor practice into a lower multiple than the two of you could have commanded together.
The sell-together case
Selling jointly tends to be right when either of you is within a few years of stopping, or when the practice’s value depends on both of you being there.
You access a better multiple. Two producing doctors, ideally with associate leverage, is a materially more attractive acquisition than one.
Neither of you takes on debt. Both convert to cash at the same time. Nobody is left carrying leverage into their final working years.
The buyer solves the production gap. A departing partner leaves a hole in the schedule. A group with recruiting infrastructure fills that hole as a matter of routine.
You would be doing it alone, in the hardest hiring market in memory.
It is cleaner. No internal valuation dispute, no seller note between two people who used to be friends, no argument in year three about whether the practice underperformed because of the market or because of the person still running it.
The obvious cost is that you also exit, whether or not you were ready. That is a genuine trade-off, though less absolute than it sounds.
Post-sale clinical roles are standard, and their length, hours and compensation are all negotiable.
A number of owners in exactly this position sell alongside a departing partner, stay on clinically for several years with all administration handed off, and describe it as a better arrangement than the partnership was.
Run both numbers properly
Here is the comparison worth doing on paper, with a CPA who understands practice transactions.
| Buy them out | Sell together | |
|---|---|---|
| Cash to you now | Negative — you are paying | Your share of enterprise value |
| Debt taken on | Substantial, personally guaranteed | None |
| Production gap | You cover it or hire | Buyer’s problem |
| Admin burden | All yours | Handed off |
| Multiple on eventual exit | Single-doctor practice, likely lower | Two-doctor practice, likely higher |
| Timeline control | Yours | Negotiated |
| Risk concentration | 100% in one asset | Diversified at close |
Most partners in their fifties and sixties who genuinely run this comparison find it closer than they expected, and often find it points the opposite way to their instinct. The instinct is usually to buy, because selling feels like the partnership failed.
The arithmetic frequently disagrees.
The numbers on one real-shaped practice
Take a two-doctor practice collecting $3.6 million. Adjusted EBITDA of $820,000 after both doctors are replaced at market rates.
Fifty-fifty ownership. You are 57.
Your partner is 63 and wants out within a year.
If you buy them out. At a fair 7x the practice is worth about $5.74 million, so their half is roughly $2.87 million. You borrow most of it.
Debt service runs near $400,000 a year over ten years against EBITDA of $820,000. That is before replacing your partner’s clinical production, which costs perhaps another $250,000 in associate compensation, assuming you can hire at all.
You now own all of a practice generating $820,000, servicing $400,000 of debt, carrying every administrative burden alone.
Then at 63 you sell a single-doctor practice. Likely at 5x to 6x rather than 7x, because the clinical depth left when your partner did.
If you sell together. The same practice at 7x is $5.74 million. Your half is $2.87 million in cash, at 57, with no debt.
Your partner takes theirs. Neither of you replaces anyone.
The buyer inherits the hiring problem, which they are far better equipped to solve.
You negotiate a three-day clinical role for four years with all administration handed off.
The buyout is not obviously wrong. At 45 it would probably be right.
At 57, with a partner leaving and a hiring market like this one, the second column is where most of the owners I have watched ended up wishing they had looked first.
The tax point that changes the number
How the transaction is structured changes what each of you keeps, and it is worth involving a CPA before agreeing anything rather than after.
In an asset sale the purchase price gets allocated across asset classes, and both buyer and seller must report the allocation consistently to the IRS on Form 8594.
Goodwill generally receives capital gains treatment, while equipment and restrictive covenants attract ordinary income rates, and depreciation previously claimed on equipment and leasehold improvements can be recaptured.
That allocation is negotiable, and it moves real money. Partners who agree a headline number and leave the structure until the lawyers get involved routinely end up with worse after-tax outcomes than they needed to accept.
None of this is a reason to delay the decision. It is a reason to bring the right people in early.
The failure mode to avoid
The worst outcome is neither option. It is stalemate.
One partner wants out, the other cannot decide, and eighteen months pass. During those months nobody invests in the practice, because why would you.
Equipment decisions get deferred. The departing partner’s hours drop and their production with them.
The team notices, because teams always notice.
By the time a decision gets made, the practice is worth less than it was when the conversation started, and the reduced value falls on both of you.
If your partner has told you they want out, they have already left in every sense that matters to the practice. The clock started then, not when you decide.
Protect the relationship by getting the number externally
One last thing, and it matters more than the mechanics.
Partner disputes over value are rarely about greed. They are about two people guessing, arriving at different guesses, and each suspecting the other of self-interest.
That suspicion is corrosive and it outlasts the transaction.
An external valuation removes the guessing. Neither of you set the number, so neither of you has to defend it.
Whatever you then decide, you decide against a shared fact rather than competing intuitions.
For partners who have worked together for twenty years and would like to still speak afterwards, that is worth the cost of the assessment on its own.
What to do in what order
Get an independent valuation first. Before any negotiation between you, both parties should be looking at the same real number. This single step prevents most partner disputes, because most partner disputes are actually disagreements about value dressed up as disagreements about fairness.
Read the partnership agreement. Find out what it says about valuation method, notice periods, rights of first refusal and what happens if you cannot agree. It may constrain your options or set a mechanism you had forgotten about.
Model the buyout honestly. Include debt service, the cost of replacing your partner’s production, and the multiple you would realistically achieve selling alone later.
Find out what the practice would attract in a competitive process. This is the number that makes the decision, and it is the one neither of you has. It also gives you an honest basis for the internal price if you do proceed with a buyout, which protects the relationship.
That last point matters more than it sounds. Partners who agree an internal price without knowing the market price are both taking a risk, and one of them is going to find out later that they were on the wrong side of it.
We are happy to give both of you that number, confidentially and at no cost, whichever route you end up taking. It starts with a free, confidential practice value estimate.
If you do decide to sell together, what you get depends heavily on how many qualified buyers are competing.
That is what the Elite Selling System is built to create: we hand-select and vet every buyer who gets to bid on your practice, the way a doorman with a velvet rope lets in only the right people, then run a private competitive window inside that group.
Our fee varies depending on the value of the practice and is entirely success-based. If we do not get you a result, we do not get paid.
Frequently asked questions
Should I buy out my dental partner or sell the practice together?
It depends mainly on your own timeline. With ten or more years of practice ahead and comfortable debt capacity, a buyout can work well.
Within about five years of your own exit, selling together generally produces a better result because a two-doctor practice commands stronger competitive interest.
How do I value my partner’s share?
Through adjusted EBITDA multiplied by a market multiple, not a percentage of collections and not necessarily the formula written into an old partnership agreement. Both partners should work from the same independent valuation before any negotiation begins.
Is a two-doctor practice worth more than twice a one-doctor practice?
Generally yes. Buyers pay a premium for practices that do not depend on any single person, so depth of clinical coverage improves the multiple as well as the earnings.
This is why buying out a partner and selling alone later can produce a worse combined outcome.
Can I finance a partner buyout?
Often, but model it against a realistic year including the cost of replacing your partner’s clinical production, which arrives immediately and is frequently underestimated. Personally guaranteed debt late in a career carries risk that deserves explicit consideration.
What if my partner and I disagree about the value?
Get an independent valuation and, ideally, find out what the practice would attract in a competitive market process. Most partner valuation disputes resolve quickly once both parties are looking at the same externally validated number.
What happens if we cannot decide?
Drift, which is the most expensive outcome. Investment stalls, the departing partner’s production falls, the team senses uncertainty, and the practice loses value that both of you were entitled to.
A decision either way generally beats an extended stalemate.
Can I sell and keep practising if my partner leaves?
Yes. Post-sale clinical roles are standard and their length, hours and compensation are negotiable.
Selling alongside a departing partner while continuing to practise on your own terms is a common and often satisfactory outcome.
Do taxes affect which option is better?
Considerably. Purchase price allocation across asset classes determines how much is taxed at capital gains rates versus ordinary income, and both sides must report it consistently on IRS Form 8594.
Involve a CPA before agreeing terms rather than after.
Sources
Valuation and practice economics
- ADA Health Policy Institute. “Trends in Dentists’ Income, Revenue and Hours Worked.” ada.org
- ADA Health Policy Institute. “Dental Practice Research.” ada.org
- ADA Health Policy Institute. “The State of the U.S. Dental Economy, Q1 2026 Update.” ada.org
- NetSuite. “Dental Practice Overhead: Cost Breakdown, Benchmarks, and Insights.” netsuite.com
- Dental Economics. “Dental practice co-ownership business and tax structures.” dentaleconomics.com
Tax and structure
- Internal Revenue Service. “Instructions for Form 8594, Asset Acquisition Statement.” irs.gov
- Florida Dental Association. “Understanding the Allocation of Assets and Minimizing the Tax Liability in a Practice Sale.” floridadental.org
Transaction process
- Mandelbaum Barrett PC. “The Four-Phase DSO Transaction Process: What to Expect When Selling a Dental Practice.” mblawfirm.com
- Cranfill Sumner LLP. “Selling Your Dental Practice to a DSO: What to Expect Before, During, and After the Deal.” cshlaw.com
- Benesch. “Dental/DSO Industry Newsletter, May/June 2026.” beneschlaw.com
Buyer market
- Association of Dental Support Organizations. “About ADSO.” theadso.org
- Becker’s Dental Review. “200+ DSO affiliations in 2025: State-by-state breakdown.” beckersdental.com
- Becker’s Dental Review. “69% of DSOs plan to boost acquisitions in 2026: Report.” beckersdental.com
- Becker’s Dental Review. “The largest DSOs headed into 2026.” beckersdental.com
Ownership and workforce context
- ADA Health Policy Institute. “Practice Ownership Trends in Dentistry.” ada.org
- ADA Health Policy Institute. “Dentist Retirements Increase.” ada.org
Melani Seymour, co-founder of Transitions Elite, helps veterinary practice owners take action now to maximize value and secure their future.
With over 15 years of experience guiding thousands of owners, she knows exactly what it takes to achieve the best outcome.
