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The Million-Dollar Blind Spot by Dr. Glenn Krieger

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The Million-Dollar Blind Spot   

Avoiding costly mistakes when considering an OSO/DSO partnership

by Dr. Glenn Krieger

Let me start with something important: I am not a CPA, a financial advisor or an attorney. What I am is an orthodontist who has spent years immersed in the OSO/DSO space—both as someone who evaluated the landscape thoroughly before joining Smile Doctors in 2021 and as someone who has stayed deeply connected to the topic since.

Through hundreds of conversations with orthodontists, brokers, attorneys, financial advisors and industry insiders, I’ve come across a recurring and troubling theme: doctors making costly mistakes, often in the millions of dollars, simply becasue of a lack of the right information or guidance. I’ve seen deals fall apart, doctors leave small fortunes on the table, or worse—move forward on a shaky foundation, unaware of pitfalls they could have easily avoided.

I’m not here to push anyone toward or away from joining an OSO or DSO. That’s a highly personal decision. What I am here to do is make sure you don’t get blindsided by bad advice or incomplete information when navigating this decision.


The financial advisor trap
Let’s begin with one of the most common missteps I see: “I need to speak to my financial advisor first.” Sounds smart, right? And sometimes it is—if your advisor understands the private equity (PE) space and how it relates to orthodontics.

Here’s the uncomfortable truth: Many financial advisors are excellent when it comes to managing a client’s mutual fund or stock portfolio but have no meaningful experience in private equity or PE-backed health care companies. I’ve sat in meetings where an advisor offered guidance that was so disconnected from the realities of OSO deals that I left shaking my head, wondering how they were giving advice on this at all.

You owe it to yourself to ask a simple but critical question to anyone offering you advice in this arena: “Have you ever been involved in a transaction with a PE-backed orthodontic group or OSO?” If the answer is no, their input—however well-meaning—is fundamentally limited.

Even worse, some advisors are so anchored to their own traditional investment models that they reflexively steer clients away from opportunities they don’t fully understand, missing the bigger picture entirely.

My advice? Get multiple opinions. Talk to people who know this space inside and out—those who have completed transactions and have long-term experience with these types of partnerships. Ask your peers who’ve joined groups (and not just the ones who’ve been in for six months; talk to those who’ve been part of a group for several years). Their insights will be far more valuable than relying solely on an advisor who’s never crossed paths with private equity.


The associate mistake that can cost you millions
Another incredibly common—and expensive—mistake is hiring an associate right before considering an OSO or DSO deal.

Let’s break it down. Most OSOs will value your practice based on a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization). Let’s say your practice could command a 6x multiple. If you hire an associate at $300,000/year and you’re still the majority producer, you’ve now just reduced your EBITDA by that $300,000.

That’s a direct hit of $1.8 million off your practice valuation. Why? Because the organization needs to account for the associate’s salary in their offer (6x $300,000). And this doesn’t even consider benefits or potential slowdowns as the associate ramps up.

I’ve even seen doctors take it a step further by promoting an associate to partner right before initiating OSO discussions. From a personal relationship standpoint, it may feel like the right thing to do. From a financial standpoint, it’s often catastrophic.

And every time I hear, “Well, my CPA or financial advisor didn’t warn me,” I’m left thinking, “Where were they during all of this? Were they asleep at the wheel?”


Undervaluing equity is a silent killer
Another widespread blind spot is undervaluing the role equity plays in these deals. Too many doctors dismiss it out of hand, assuming it’s “funny money” or something that might never materialize.

Let’s be pragmatic: even with a modest 2x equity growth over five years—roughly a 14.4% annualized return—you could turn $1 million of equity into $4 million over a 10-year horizon. And that’s a conservative model. History would demonstrate that top-quartile private equity firms statistically return 23% to 42% annually. (that’s a 2.8–5.3x return in five years.)

Now, let’s say you achieve a 2.5x growth every five years (still modest by PE standards). That $1 million turns into $6.25 million in 10 years. The beauty is that while you’re working on your practice, your equity is working for you, compounding in the background.

Can you replicate that growth rate on your own? Some might, but many won’t. If your practice isn’t on a hyper-growth trajectory, you might want to reframe how you view equity potential.


Will you really be ready?
Another refrain I hear constantly: “I’m just not ready yet.” My follow-up question is always, “Ready for what?”

Unless you’re aggressively growing your practice at an extraordinary pace, what exactly are you waiting for? Many doctors hesitate, hoping for the elusive “perfect time.” Meanwhile, equity in some of these organizations could have been growing all along.

With models like Smile Doctors’ joint venture program, for instance, you retain significant equity in your practice while still reaping the benefits of the larger organization. You’ll continue to take home a sizable share of profits on top of your salary, buyout and participation in the equity upside of the OSO.

The opportunity cost of waiting, especially if you’re not actively growing fast, could be staggering.


Get an offer—it costs nothing
I am perpetually shocked at how many orthodontists don’t even take the step of requesting a non-binding offer. There’s zero risk and zero commitment required. Would you send a patient into surgery without getting a consult first? Of course not.

Even if you never move forward, knowing what your practice is worth provides a valuable lens for future decisions. It can impact how you think about overhead, growth strategies and even team structure.

At worst, you walk away with clarity. At best, you might discover options you didn’t even know were on the table.


The attorney dilemma
Then there’s the lawyer situation. I’ve lost track of how many times I’ve heard, “I’ve got a buddy who’s a mergers and acquisitions attorney.” Great—if you’re doing a generic business transaction. But when it comes to OSO/DSO deals, using someone unfamiliar with this very specific niche can cause serious problems.

I’ve personally watched deals fall apart—or worse, close with poor terms—because doctors used friends or acquaintances who were fantastic in other areas but lacked the depth needed for PE-backed health care transactions.

Look, you wouldn’t go to your general dentist to get advice on an orthognathic surgery case, would you? Same logic applies here.

If you want representation that protects your interests and understands the nuances of OSO/DSO agreements (which are unique in structure, terms and post-close expectations), seek out an attorney who has done many of these deals with the specific organization you’re working with—or at least in the PE-backed orthodontic space at large.


Don’t let the loudest voices steer you off course
Finally, beware of the loud voices online and in casual conversations—the ones vehemently opposed to OSOs or private equity-backed groups. Often, their opinions are based on limited experience, outdated information or personal agendas.

I once debated someone on a podcast who spent 90 minutes railing against private equity, only to admit at the very end that they ran their own competing group that stood to benefit if doctors stayed in private practice.

Take advice from people who’ve lived the experience, good or bad, and who have navigated both sides of the conversation. If someone hasn’t gone through a PE-based deal or seriously gone down the letter of intent/contractual agreement rabbit hole and lived the life after closing, their knowledge (and bias) could be disastrous for you.


My final word
Joining an OSO or DSO isn’t for everyone, and that’s okay. I’m not here to pitch you on Smile Doctors or any other group. What I want is for every orthodontist to make choices with eyes wide open, armed with accurate, relevant information—not fear or folklore. It’s your choice and you should make it with all the information you can gather.

The good news is you don’t have to figure it all out alone. There are plenty of doctors out there, me included, who’ve been through the process and are happy to share honest feedback.
Author Bio
Dr. Glenn Krieger Dr. Glenn Krieger graduated from dental school in 1992 and moved to Seattle in 1996, where he established a solo boutique practice. After 20 years as a restorative and cosmetic dentist, Krieger returned to residency to become an orthodontist. He maintains a private orthodontic practice in Lewisville, Texas. Krieger has presented to thousands of dentists in North America, has been published in textbooks and dental periodicals and has been named a “Top Clinician in Continuing Education” nine times. He also is the administrator of Orthopreneurs, a group dedicated to helping orthodontists run their practices with an entrepreneurial bent, and is a member of Orthotown’s editorial advisory board.

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September 2025
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