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A Golden Goose Story by Dr. Aaron Swapp

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A Golden Goose Story 

Three unique examples of selling to a DSO

by Dr. Aaron Swapp

About halfway through my senior year of high school, I was sitting in calculus class with friends, discussing our future careers. My friend Nate wanted to be a dentist; Brant wanted to be a physician. I told them I wanted to be an aerospace engineer and build rockets. Instead of being impressed, they asked, “Do you really want to work for someone else for the rest of your life?”

That question stayed with me. I realized I wanted to control my own destiny—not be subject to someone else’s agenda. While I like to think I could have been the next Elon Musk had I stayed on that path, owning a space company seemed unrealistic. The only business owner I knew at the time was a dentist. Not wanting to copy Nate, I chose orthodontics instead. Ironically, I had never even been to an orthodontic office. My decision was entirely driven by a vision of life as a business owner.

Fast forward more than a decade, and I’m living my dream as a private practice orthodontist. Owning my practice has been everything I hoped for and more. While I noticed some doctors around me selling to DSOs (dental service organizations), I never gave it much thought. That is, until I saw highly respected colleagues—ones I thought would never sell—joining DSOs. I began to question: Am I missing out?

I love running my practice, but I also love my family. If DSOs truly offer the chance to create generational wealth, as they claim, then it’s worth investigating. Trying to remain objective, I built a spreadsheet calculator to compare the financial outcomes of staying in private practice versus selling to a DSO. The results surprised me: For the majority of orthodontists, selling to a DSO leads to lower financial outcomes compared to a traditional sale.

To illustrate, I’ll walk you through three scenarios.

Scenario 1: Full sale to a DSO
Dr. Jones runs a $2.5 million practice with 55% overhead. A DSO offers to buy 100% of his practice for $4.6 million (6x EBITDA of $775k). Dr. Jones agrees to work for five years post-sale, earning $350,000 annually. He invests 10% of his original payout in the DSO as “stock,” which he hopes will double in value within five years. He invests 80% of the remaining after-tax payout into a retirement fund with an 8% annual return.

After accounting for taxes and living expenses, Dr. Jones’s wealth accumulation will reach $4.9 million by year 5. If he continues to work as an associate beyond that, his wealth will grow to $6.7 million by year 10 and $9.3 million by year 15.

Scenario 2: Partial sale to a DSO
Another DSO offers a partial sale, buying 60% of Dr. Jones’s practice for $3.25 million (7x EBITDA) while he retains 40% ownership. He is required to invest 10% of his payout in DSO “stock.” The DSO estimates they will recapitalize every four years and assumes increasing valuations at each recapitalization event. Most of each recapitalization payout is reinvested back into DSO stock. Dr. Jones plans to sell all of his company stock at year 10. He follows the same retirement and spending plan as in Scenario 1.

After accounting for taxes and living expenses, Dr. Jones’s wealth accumulation will reach almost $4.1 million by year 5 and $8.7 million by year 10. If he continues to work as an associate beyond year 10, his wealth will grow to $12.5 million by year 15.

Scenario 3: No sale, retaining ownership
Dr. Jones decides against selling to a DSO and opts to retain full ownership for five more years before selling traditionally to another orthodontist. Assuming practices remain in high demand, he anticipates selling for 100% of collections. By the end of year 5, Dr. Jones’s wealth accumulation will reach $5 million. If he maintains ownership past year 5, his wealth will grow to $9.2 million by year 10 and $15.2 million by year 15.

You can explore how these scenarios compare for your practice using the calculator at p3-ortho.com.

The comparison
At the five-year mark, Scenarios 1 and 3 generate similar wealth. However, beyond five years, private practice significantly outpaces Scenario 1 in wealth creation. Retaining ownership allows for greater financial control and flexibility, as your practice remains one of your most valuable assets.

Scenario 2, while showing potential for higher returns, relies heavily on speculative recapitalization events and ties substantial capital to the DSO’s success. Additionally, DSOs typically deduct an 8% management fee from collections, impacting profitability.

While 100% of collections may seem historically high, I believe it is reasonable given the current scarcity of practices. Personally, I paid higher than that amount long before practices were in such high demand.

Deep thoughts
  • Profitability is king: Of all the variables in the calculator that impact the outcome of a private practice or DSO sale, profitability ranks no. 1. While this may seem obvious, many doctors focus more on growth and production while neglecting to manage their overhead. Keeping overhead low not only increases your earnings but also makes your work more enjoyable.
  • Partial ownership has risks: DSOs often require doctor ownership, and finding buyers for minority shares can be challenging. This lack of liquidity adds uncertainty to your retirement plan.
  • DSO stock value is unpredictable: Returns are heavily dependent on the DSO’s recapitalization plan, which can make these investments speculative and difficult to rely on.
  • Reduced autonomy: Selling to a DSO means giving up at least partial control of your practice, potentially altering how you work and make decisions.
  • Referral bonus: It’s important to note that doctors who refer a practice to a DSO often receive a substantial bonus. These bonuses, typically tied to the size of the referred practice, usually range from $50,000 to nearly $300,000, with most exceeding $100,000.

Don’t kill the goose
Many of us know the fable of the farmer whose goose lays golden eggs, making him wealthy. Consumed by greed, he kills the goose, hoping to access all the gold at once—only to lose everything.

I see parallels in our profession. Some orthodontists sell their “golden goose” (their practice) to DSOs, only to regret it later when they lose their primary source of wealth and autonomy. While I understand this feeling isn’t shared by all doctors, it’s a sentiment I hear all too often. DSOs may entice us with promises of financial freedom and relief from management burdens, but these often come at the expense of independence and long-term wealth creation. Don’t let the allure of short-term gains blind you to the value of what you’ve built. Invest in yourself and your practice—your greatest financial asset.

Just say no to the DSO. OT

Author Bio
Aaron Swapp, DMD, MS Dr. Aaron Swapp, DMD, MS, graduated summa cum laude from the University of Nevada, Las Vegas, and completed his orthodontic training and master’s in oral biology at Texas A&M Baylor College of Dentistry. His research on cortical bone damage and accelerated tooth movement earned the Watson Award from the American Journal of Orthodontics and Dentofacial Orthopedics. He is a board-certified orthodontist and teaches part-time at Baylor.



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