Key takeaways
- Define included, retained, and unresolved items before comparing proposals.
- Test the operating plan for retained offices as carefully as the sale package.
- Distinguish a technical system split from lawful data access and clinical duties.
- Compare immediate cash separately from the indicated value of retained equity.
Decide what you want to stop owning
Selling a group starts with a personal and commercial choice: transfer the whole operation, or sell selected offices and keep running the rest. Those choices leave the seller with different cash, duties, risks, and assets. A proposal for selected locations should not be compared with a whole-group offer by headline price alone.
Write the desired end state before choosing the package. State whether you want to leave management, retain a clinical role, keep an office, keep real estate, or preserve an interest for another owner. Identify which goals are essential and which can change. A partial sale that leaves you managing the hardest remaining work may fail your goal despite an appealing price.
The ADA's valuation guidance addresses defining the property and timing of a sale, including a partial sale. Use that scope question before comparing group proposals.
This guide focuses on the sale package and what remains outside it. The multi-specialty group guide covers the underlying entity, reporting, and shared-cost map. Complete that foundation first, then use it to test whether the package you want to sell can function on the proposed terms.
Selling a multi-location dental group: define the perimeter
Use a written sale-perimeter schedule. It should connect each location to the entity, assets, contracts, people, systems, and liabilities involved. Label every item as included, retained, or unresolved. Do not treat a buyer's interest in an office address as agreement on everything used there.
The useful schedule shows dependencies as well as ownership. An office can have its own premises and team yet still rely on a shared phone system, billing account, supply arrangement, or scheduling process. A buyer needs a defined way to obtain the work it is purchasing. A seller retaining an office needs a defined way to keep operating after the separation.
| Package item | Question for the proposed transfer | Question for the retained business |
|---|---|---|
| Ownership interests or operating assets | What exactly can the seller convey? | What interest or asset remains with each owner? |
| Premises and equipment | Which rights and items are included? | Which shared items need replacement or continued access? |
| People and service functions | Who will perform each needed task? | Who handles the work that used to be shared? |
| Software and telephone systems | What access and data are included in the plan? | What must remain available after the split? |
| Brand, website, and inquiries | Which names and contact routes will each side use? | How will misdirected inquiries be handled? |
| Debt and other obligations | Which settlements or releases are closing inputs? | Which obligations remain after the sale? |
| Unfinished operational work | Who owns each open task at handoff? | How will exceptions reach the responsible person? |
For each unresolved row, name an evidence owner and the decision it blocks. A disputed item should not quietly become included because it appears in a draft presentation. Have the transaction team reconcile the schedule to the actual proposal and agreement as those documents develop.
Build a credible retained-business plan
Retaining an office means retaining an operating job. Prepare its plan with the same care as the sale package. Identify who will collect money, pay staff, order supplies, maintain systems, manage the premises, and resolve patient-service questions. Name the responsible person and the evidence that the arrangement is ready.
The SEC's staff accounting bulletin discusses parent-incurred costs and standalone expense information for a public registrant. Its narrow relevance here is the distinction between historical allocations and the cost of operating separately. It is not a reporting mandate for a private dental sale.
Use actual work and proposed arrangements to question the retained forecast. A historical charge from the group may not describe the service available after closing. Request a written scope and supported cost for any replacement service. Keep an unresolved support arrangement visible rather than assuming the buyer will continue providing it.
If temporary support is proposed, define the task, start and end conditions, access, price, and responsibility for exceptions. Ask what happens if migration finishes late or the seller needs more help than expected. The parties need an agreed response; a hopeful completion date is not one. Counsel should address the agreement and its limits.
Do not present keeping an office as a passive investment unless the underlying plan supports that role. If you will perform management work yourself, identify that commitment and how its cost or compensation is treated. A retained-value estimate that assumes fully staffed operations should not be paired with a plan that relies on unpaid owner labor.
Test separation before relying on the closing date
A partial sale needs evidence that the proposed separation is feasible. Identify each system owner and obtain its actual process. Ask what can be separated, what will remain combined, how the result is checked, and who handles a failure. Avoid treating the sale agreement's location list as a technical migration plan.
Open Dental's split guidance describes a test split and verification before the final split, with provider or clinic as possible split bases. It also says imaging software is not converted by that service. These are that vendor's stated process limits, not a universal migration rule.
For the proposed package, turn those questions into acceptance evidence. Ask the authorized reviewers to verify the relevant records and workflows in the planned environment. Record the exceptions, their owner, and the resolution needed before relying on the result. Separate software settings, document access, imaging, and other systems so a successful check of one does not stand in for the rest.
Do not equate a technical ability to copy data with permission to disclose it. Patient information, required notices, lawful access, and clinical responsibilities need their own review. The seller and buyer should know which professionals decide those questions and which vendor staff implement the approved instructions.
Decide whether locations must close together
A proposal may depend on obtaining all selected offices as one package. Another may permit defined locations to close separately. Do not assume those arrangements are interchangeable. Discuss the intended structure before a delayed consent, failed migration, or unresolved debt item turns it into a live dispute.
Ask the transaction team to document the intended result under specific conditions. Can a site be removed? If so, how is price revised? What happens to shared services, staff assignments, and remaining obligations? Does the seller retain an option to stop, or is some other result intended? These are issues for the actual agreement, not universal rights supplied by this guide.
| Condition to test | Question the parties need to answer | Evidence to retain |
|---|---|---|
| One selected office is not ready | Does the entire package wait, change, or end? | Agreed treatment and responsible decision makers |
| A shared-service arrangement is incomplete | Can both businesses operate under a permitted interim plan? | Service scope, access plan, cost, and approvals |
| A required payoff or release differs from the estimate | Who resolves the difference before funds move? | Current statement and agreed closing treatment |
| A system test finds unresolved exceptions | What must be corrected before relying on the split? | Test results and documented resolution |
| The package changes late | Which earlier terms and analyses need revision? | Revised perimeter, price comparison, and closing instructions |
A package decision also affects buyer selection. An interested buyer may fit the whole group but lack a workable plan for a separated portion, or the reverse. Ask it to respond to the defined package. For DSO proposals, the multiple DSO offers guide provides the broader framework for cash, retained equity, and the seller's future role.
Worked example: separate cash from retained value
Consider an invented owner choosing between two all-cash offers. Both use the same assumed closing date. The whole-group proposal buys A, B, and C. The selected-office proposal buys A and B while the seller retains C. Every amount is supplied for teaching; none represents a fee quote, market valuation, or predicted offer.
The whole-group price is $2,400,000. Supplied transaction costs are $80,000, and the specified debt settlement is $300,000. The selected-office price is $2,100,000, with $70,000 of transaction costs, $240,000 of required debt settlement, and $60,000 of one-time separation spending paid at closing.
Assume a separate valuation supports $500,000 of equity in retained office C at that same date. It already reflects all C's remaining debt, including the retained $60,000 debt balance, and all necessary ongoing standalone support costs. It also assumes all required owner work is properly paid or included as a cost. The one-time separation amount is outside that value and is deducted only from closing cash.
| Supplied item | Whole group: A, B, and C | Selected offices: A and B |
|---|---|---|
| Cash purchase price | $2,400,000 | $2,100,000 |
| Transaction costs | −$80,000 | −$70,000 |
| Specified debt settlement | −$300,000 | −$240,000 |
| One-time separation spending | $0 | −$60,000 |
| Closing cash after these items, before tax | $2,020,000 | $1,730,000 |
| Separately supplied retained equity value | $0 | $500,000 |
| Closing cash plus retained-value indication | $2,020,000 | $2,230,000 |
The selected-office option produces $290,000 less closing cash. Adding the retained-value indication produces a total $210,000 above the whole-group cash result, but that extra indicated value is not a payment. C has not been sold. Its indicated value may not be available as cash when the seller wants it.
This is a comparison at one date, not an after-tax wealth plan or a forecast of lifetime returns. Sale taxes, future distributions, later sale costs, changes in retained value, and the seller's preferences are outside it. A real decision needs those separate analyses and the actual documents. Do not add future distributions to this snapshot without checking what the retained valuation already reflects.
Test the retained value and separation spending independently
The next table changes one assumption at a time from the selected-office base. The whole-group option remains unchanged. These cases test the seller's two different exposures: the value of what is kept and the immediate cash needed to separate it.
| Independent selected-office case | Closing cash before tax | Retained-value indication | Combined indication at closing |
|---|---|---|---|
| Base assumptions | $1,730,000 | $500,000 | $2,230,000 |
| Retained C value becomes $350,000 | $1,730,000 | $350,000 | $2,080,000 |
| Separation spending becomes $110,000; C value returns to $500,000 | $1,680,000 | $500,000 | $2,180,000 |
The lower retained value leaves closing cash unchanged. It reduces the combined indication to $2,080,000, only $60,000 above the unchanged whole-group result. That arithmetic does not establish a preference for retaining C. It shows how much the comparison depends on the separate valuation and the seller's willingness to remain an owner.
The higher separation spending reduces closing cash by $50,000. The combined indication becomes $2,180,000, while the closing-cash shortfall against the whole-group option grows to $340,000. If the seller's goal requires cash at closing, that cash difference deserves its own decision even though a retained asset remains.
Use the results to direct the next review. Obtain better evidence for C's value if that assumption drives the choice. Obtain a firmer separation scope and spending estimate if that drives the cash need. Do not hide either uncertainty inside a single optimistic total.
Control disclosure as the package becomes specific
Begin package testing through seller-blind outreach. Omit the owners' and group's identities, exact office locations, financials, staff details, and other clues that identify the business. Require an NDA before a prospective buyer receives identifying information; then give authorized reviewers the package detail they need under the confidential sale process.
The FTC's March 2018 premerger discussion recommends tailored information sharing and safeguards for competitively sensitive material. This dated discussion supports careful process design; it does not establish that an NDA alone resolves every current competition-law question.
Bring staff into the work according to the actual separation tasks. A system administrator may need to test access, while a payroll lead may need to prepare the approved handoff. Agree on each person's role, information access, and communication timing with the seller. Staff plans should follow the work and applicable duties, not a blanket instruction to wait until every location closes.
Keep patient privacy, clinical authority, required notices, and accurate authorized diligence separate from commercial secrecy. A confidential process should still produce reliable answers about what is sold and how the remaining business will function. Do not let a communication plan conceal a material package limitation from an authorized buyer.
Common mistakes in a partial group sale
The first mistake is marketing a bundle before the seller agrees on what it contains. The second is promising shared support without a service owner, cost, or end condition. Both can force the seller to reconsider the package after a buyer has priced a different business.
Another mistake is describing retained equity as though it were sale proceeds. Keep the cash column separate. Ask the seller whether continuing ownership fits the desired role as well as the financial plan. The single-location versus group comparison can help frame the continuing owner workload.
Finally, update the whole decision file when a location drops out. Price, obligations, system scope, staff assignments, and the retained forecast may all need new review. The dental practice merger guide addresses the separate problem of combining operations at a surviving site. Do not substitute that move plan for a sale-perimeter decision.
Summary: compare the package and the business left behind
A whole-group sale and a selected-office sale leave the owner with different cash, work, and assets. Define the sale perimeter, support arrangements, and intended closing structure before relying on either offer. The example keeps closing cash separate from retained value and tests each source of uncertainty on its own. Bring the proposed packages and remaining-business questions to a confidential planning conversation with Jason Taken at HedgeStone.
Frequently asked questions
How much less closing cash does the partial-sale example produce?
Under the supplied base assumptions, the selected-office option produces $1,730,000 before tax versus $2,020,000 for the whole group, a $290,000 cash difference.
Is the retained office’s $500,000 value part of the purchase payment?
No. It is a separately supplied equity-value indication at the assumed closing date. The retained office has not been sold, and its value is not a cash payment.
Where is the retained office’s debt treated in the example?
The supplied $500,000 retained equity value already reflects all its remaining debt, including the retained $60,000 balance. The example does not subtract that debt again from closing cash.
What changes when separation spending rises to $110,000?
Starting from the base retained value, closing cash falls to $1,680,000 and the combined cash-plus-retained-value indication becomes $2,180,000. The whole-group result stays unchanged.
Can one office close if another selected location is not ready?
That depends on the actual agreement and required conditions. Have the transaction team define whether the package waits, changes, or ends, including any price and service consequences.
Does Open Dental’s split service handle every imaging system?
Its split guidance says imaging software is not converted by that service. Confirm the actual imaging vendor’s scope separately instead of assuming one system test covers all systems.
When should staff join the separation work?
Time involvement to assigned tasks such as system testing or payroll preparation. Define access and communication with the seller while keeping required notices and other duties separate from commercial confidentiality.
What if keeping an office conflicts with leaving management?
Revisit the package. A retained office needs a supported operating plan and an acceptable owner role; a larger combined value indication does not resolve unwanted continuing work.
Sources
Retrieval dates appear beside each source. Figures retain their stated observation years; retrieval does not make older data current.
- ADA valuation scope · Retrieved
- SEC standalone-cost context · Retrieved
- Open Dental split process · Retrieved
- FTC March 2018 safeguards · Retrieved