How to Fund a Dental Practice Purchase in 2026
by Raises.com
This article is general information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.
A dental practice purchase is funded around one person, the selling dentist, because the production walks out with the seller unless the transition is written into the deal. A dentist buyer then usually fits an SBA 7(a) loan. A group of non-dentist operators needs investor equity and, in states that require a dentist owner, a dental service organization structure.
1. Answer the dentist-owner question first
Start with ownership, because a dental practice in a state that requires a dentist owner cannot be bought by your investors outright, however good the deal is. Check the state's dental board rules before the LOI. The answer decides the entity, the lender and the investor documents. Get it in writing from health care counsel.
The usual answer for non-dentist buyers is a dental service organization. A licensed dentist owns the clinical practice, while a separate management company, the DSO, holds the non-clinical assets and charges the practice a fee under a management services agreement. Your investors buy into the DSO. They never own the clinical side.
The fee is the weak point in these structures. Counsel writes it so the dentist keeps clinical control, because a fee that reads like a cut of patient revenue can break the rules the structure exists to respect. Put the agreement in the data room on day one.
2. Write the seller's transition into the purchase
The selling dentist is the key man in the plainest sense, because the patients chose that person and much of the production is that person's hands. Buy the chairs without the dentist and you bought chairs. Write the transition into the purchase agreement, with the seller's months of chair time stated.
A written transition carries four things.
- An agreement for the seller to keep treating patients for a stated period after closing
- A letter from the seller to the patients introducing the new dentist
- A non-compete and a non-solicit signed as part of the sale
- A seller note or holdback that ties part of the price to the patients who stay
The last item makes the first three hold. A seller who carries part of the price has a reason to make the handoff work.
Cody Sechelski, CEO of Masterbuilt Ventures Holdings, bought a profitable family-run HVAC business with seller participation, the first deal in his Texas roll-up, with Raises.com® advising on capital structure and lender sourcing. It is not a dental practice. His short list of what gets a deal from LOI to close still applies: financials that agree with each other, and a business that survives the key-man test. A dental practice fails that test until the transition is signed.
3. Price what stays after the seller leaves
What you buy is the patient base, the equipment and the lease, and each one needs its own paper in the data room before a lender or an investor reads the model. Start with the patients. Split production between the owner's chair and the hygiene chairs, and show the mix of insurance and fee-for-service patients. The owner's share is the part at risk.
The equipment list needs ages and service records. Put the replacement dates in the model, so the first chair that dies is a planned cost instead of a surprise.
Read the lease next. If the practice sits in a leased suite, the landlord's consent to assign and the years left on the lease belong next to the loan term. A loan that outlives the lease is a problem you can see from the LOI.
4. A dentist borrows, an operator group raises
When the buyer is the dentist who will treat the patients, an SBA 7(a) loan is the natural senior debt. A 7(a) loan tops out at $5 million. A seller note usually sits behind it, and the SBA's SOP 50 10 sets the terms that note must meet before it can count toward your equity. Read the current version with your lender.
An operator group raises investor equity into the DSO under Regulation D. Rule 506(b) fits investors the group already knows, and Rule 506(c) fits a group that plans to advertise and verify every buyer as accredited. A bank or private credit lender lends against the DSO.
Ade went from no funded deals to two closed acquisitions working with Raises.com®, on a thesis of defensible industries, capital preservation and sustainable returns that are predictable. His file does not describe a dental practice. A practice can read that way to an investor, and it only holds up once the transition and the ownership question are on paper.
5. Show the lender the practice pays its own debt
A lender wants the practice's own cash flow to cover the loan, measured as a debt service coverage ratio. Replace the seller's pay with the cost of the dentist who treats patients after close. Skip that and the ratio is fiction.
Dave Klivans of ag.online, LLC, who worked with Raises.com®, holds a different licensed healthcare business: a memory care facility financed with SBA and commercial bank debt. That is not a dental practice either. For him the team pulled his holdings into a single data room and modeled his personal and business entities together, so lenders could see the debt service coverage they required. A dentist buyer gets read the same way. The lender reads your personal balance sheet beside the practice's.
Dentist buyer vs operator group
| Item | Dentist buyer | Operator group |
|---|---|---|
| Who owns the clinical practice | The buyer, directly or through a professional corporation | A licensed dentist, in states that require a dentist owner; the group owns the DSO |
| Senior debt | An SBA 7(a) loan, capped at $5 million, or a bank loan | A bank or private credit loan to the DSO |
| Where investors sit | In the buyer's company, if there are any | In the DSO, under Rule 506(b) or Rule 506(c) |
| The key-man problem | The seller's patients have to accept the new dentist | The same, plus a dentist to treat patients and own the clinical entity |
| The document investors read first | The purchase agreement and the transition terms | The management services agreement and the transition terms |
Frequently asked questions
Can a non-dentist buy a dental practice?
Not the clinical practice itself in a state that requires a dentist owner. The usual route is a DSO that owns the non-clinical assets and serves a practice a licensed dentist owns. Counsel confirms the state's rules first.
Can I use an SBA loan to buy a dental practice?
Yes, when you are the dentist who will run it and you meet the SBA's ownership rules in SOP 50 10. The program's limit is $5 million.
What happens to the patients when the dentist sells?
They follow the seller unless the transition is written into the purchase. Stated chair time, an introduction letter and a seller note tied to retention keep them.
Do investors own the dental practice in a DSO?
No, they own the DSO, which earns a fee under the management services agreement. The dentist keeps the clinical practice and clinical control.
What does a lender want to see on a practice purchase?
The practice's own cash flow covering the loan, with the seller's pay replaced by a real dentist's cost. Add the transition terms, the equipment list and the lease.
For a practice purchase, Raises.com® builds the structure the money rests on: the PPM, the subscription and operating agreements, the CFA financial proformas and the data room. Each one keeps the raise legally and financially sound, whether the buyer is a dentist or a DSO. Read how acquisitions get funded at https://raises.com/buy-a-business. Book a strategy call at https://raises.com/call.
General information, not legal, tax, securities or investment advice. Laws, rates and programs change, and the details here may no longer be current. Confirm anything you plan to act on with your own counsel and accountant.