> ## Documentation Index
> Fetch the complete documentation index at: https://dso.getlemma.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Overview: your first acquisition
> Why acquisition is dentistry's growth channel, the three clocks every deal runs on (diligence, credentialing, transition), and the five-step map from LOI to an integrated practice.
Buying an existing dental practice is one way dental groups grow. A transaction can provide an operating location, team, records, and an established patient and recall base sooner than a de novo, but patients remain free to choose their provider, employees may leave, contracts may not transfer, and no closing guarantees retained revenue. This tutorial follows one fictional deal from first conversation to ninety days post-close; its price, timing, retention, and operating assumptions are teaching inputs, not market benchmarks.
## The running example
Throughout this tutorial we follow **Bluebird Dental**, the fictional dental support organization (DSO) from the earlier tutorials, buying its second practice:
* **Sam Calloway**, Bluebird's non-dentist founder, runs the deal.
* **Dr. Maya Okafor, DDS**, owns the professional entity (the PC) that holds Bluebird's clinical practice and will hold the acquired one.
* **Dr. Ellis** is the seller: a solo general dentist, 31 years in practice, four operatories, roughly **\$950k in annual collections**, and ready to retire.
Bluebird's first location is live and billing. If it isn't, do [Zero to first paid claim](/start/zero-to-paid/overview) first. This tutorial assumes the two-entity structure, the management services agreement (MSA), and at least one payer contract already exist.
## Why acquisition is a dental growth channel
Dentistry remains fragmented while DSO affiliation has grown. The share of US dentists affiliated with a DSO more than doubled from 7.2% in 2015 to **16.1% in 2024**, and among dentists within ten years of dental school it was 26.5%.1 In the Private Equity Stakeholder Project's dataset, about **95% of the dental private-equity transactions it tracked in 2025 were add-ons** to existing platforms rather than new platforms.2 That advocacy-source dataset is evidence about the transactions it captured, not a census of all dental-practice sales or proof that acquisition is the right route for a particular group.
Some buyers underwrite a higher valuation multiple for earnings inside a larger, diversified group than for a stand-alone practice. That multiple expansion is a valuation hypothesis, not value created automatically at closing; it depends on market conditions, scale, performance, buyer demand, integration, and the quality of the earnings. See [DSO economics](/concepts/finance/dso-economics). For fictional two-location buyer Bluebird, the practical acquisition thesis is access to an **existing patient and hygiene recall base** that would take time to build in a de novo. Diligence must test whether that base is active and transferable in practice, and patient retention remains uncertain. The alternative path is [Open a de novo](/guides/growth/open-a-de-novo).
ADA data show that solo practice is more concentrated among later-career dentists.1 That can create transition opportunities, but the workforce data do not predict when a particular owner will retire, whether a practice will be offered for sale, or its value. Fictional Dr. Ellis is Bluebird's seller.
## The three clocks
Treat the transaction as three overlapping workstreams whose starting points and completion dates can differ. Bluebird calls them clocks so the team does not collapse diligence, payer readiness, and post-closing transition into one schedule.
```mermaid theme={null}
graph LR
A[Clock 1: Diligence
LOI → closing
core review modeled at 4–8 weeks] --> C[Close]
B[Clock 2: Payer transition
start when each payer permits] --> E[Each payer's effective date
may precede or follow close]
C --> D[Clock 3: Transition
close → modeled day-90 milestone
work may continue]
```
| Clock | Starts | Ends | Who controls it |
| -------------------- | -------------------------------------------- | ---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- |
| **Diligence** | LOI signed | Closing or the applicable contractual milestone; Bluebird front-loads a modeled 4–8-week core review | Buyer and seller, with advisers and third-party dependencies |
| **Payer transition** | LOI or the earliest point that payer permits | Each payer's written effective date | Payer or program; parties control submission timing and completeness |
| **Transition** | Close | Bluebird's modeled day-90 milestone; work may continue | Buyer, practice leadership, team, and vendors |
Payer transition can outlast the deal schedule. An asset purchase, equity transfer, TIN change, ownership change, new location, or provider linkage can each produce different notice, assignment, contracting, or credentialing work by payer and program. Bluebird requests each payer's written determination at LOI and starts every permitted application or change process immediately.3
## The five steps
Sourcing through brokers and direct outreach, reading the seller's P\&L past the broker's "cash flow" number, and how the cited advisers define the denominator for their illustrative 5–8x range. [Go →](/start/first-acquisition/find-and-value-a-practice)
Price, structure, exclusivity, a diligence window, and a covenant giving Bluebird the payer list and seller cooperation so it can request each payer's transaction instructions and start applications or notices when that payer permits. [Go →](/start/first-acquisition/find-and-value-a-practice)
Active-patient definitions, hygiene reappointment, PPO write-offs by plan, leased networks, credit balances, and the finding that reprices Bluebird's deal. [Go →](/start/first-acquisition/run-diligence)
Written billing authority at close, records custody, the AR tail, and day-one banking. [Go →](/start/first-acquisition/close-and-transition)
The first 90 days: PMS conversion, fee schedules, team retention, patient communication, and hygiene reappointment. [Go →](/start/first-acquisition/integrate-the-practice)
## Illustrative timeline: a modeled 90–120-day LOI-to-close window
Bluebird signs the LOI on day 0 and models a close around day 100. That is a fictional deal assumption, not a standard or promise: regulatory approvals, financing, diligence findings, landlord and payer consents, and the parties' leverage can shorten, extend, or prevent closing. Bluebird assumes payer transition may be the longest workstream and begins every payer-permitted step early, but it does not assume payer readiness by closing.
| Activity | Illustrative planning input | Can it run in parallel? |
| ---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- |
| Sourcing and first conversations | Weeks to years | Not applicable |
| LOI negotiation | 1–3 weeks | Not applicable |
| **Commercial payer credentialing / contracting** | **Bluebird models 90–180 days per payer and 30–90 days for some direct PPO pathways; neither range is a payer SLA**3 | Often. Start only the applications, notices, or information requests the payer permits |
| **Medicaid transaction/enrollment analysis + plan or DBA steps** | State- and delivery-model-dependent4 | Start as early as the program permits |
| Confirmatory diligence | 4–8 weeks | Yes |
| Purchase agreement drafting and negotiation | 4–10 weeks | Overlaps diligence |
| Financing (practice acquisition loan, if used) | 4–8 weeks | Yes |
| Close logistics: banking, payroll, insurance, licenses | 2–4 weeks before close | Yes |
| Transition and integration | Close through \~day 90 | Follows close |
**Use the LOI to unlock payer diligence.** Applications need the practice's payer list, location details, and each dentist's information, so negotiate access and seller cooperation into the LOI. Whether an application, notice, consent request, or other step may begin before signing or closing is payer- and transaction-specific.
## What this tutorial is not
This learning path follows one fictional Bluebird deal from start to finish using illustrative numbers. For a task-oriented version with a full diligence table, deal-structure decisions, and a verification checklist, see [Acquire a dental practice](/guides/growth/acquire-a-dental-practice). Corporate practice rules and DSO filing requirements vary by state, so check [DSO laws by state](/reference/legal/dso-laws-by-state) and [Register a DSO](/guides/compliance/register-a-dso) before signing the LOI.
## Next
How Bluebird sources a practice and builds its illustrative value indication.
## Sources
1. ADA Health Policy Institute, [The U.S. dentist workforce (August 2025 deck, PDF)](https://www.ada.org/-/media/project/ada-organization/ada/ada-org/files/resources/research/hpi/US_dentist_workforce_2025.pdf); DSO affiliation 7.2% (2015) → 16.1% (2024); 26.5% among dentists ≤10 years out; solo practice concentrated in late-career cohorts.
2. Private Equity Stakeholder Project, [PE healthcare deals: 2025 in review](https://pestakeholder.org/reports/pe-healthcare-deals-2025-in-review/) (deal counts; advocacy source).
3. Aetna, [provider education: demographic and TIN changes (PDF)](https://www.aetna.com/document-library/health-care-professionals/Q4-provider-education-week-remediated.pdf); Delta Dental, [dentist FAQs](https://www.deltadental.com/dentist/dentist-faq/); CMS, [NPI FAQs](https://www.cms.gov/priorities/key-initiatives/burden-reduction/administrative-simplification/unique-identifiers/faqs). Any duration in the timeline is a planning assumption, not a payer SLA.
4. Examples of program-specific processes: NCTracks, [change of ownership FAQs](https://www.nctracks.nc.gov/content/public/providers/faq-main-page/Change-of-Ownership--CHOW--FAQs.html); TMHP, [PEMS CHOW process](https://www.tmhp.com/news/2025-11-03-clarification-pems-chow-process). These examples are not a national rule.