Share of headline price paid at close.
Core frame
One headline price may contain several different deals.
The cleaner question is not simply, "What multiple did they offer?" It is, "How much is cash for the asset, how much depends on me staying and producing, and how much is tied to equity or targets I do not control?"
Headline offer - contingent / rolled / at-risk value - underpriced post-close labor = cleaner practice-value comparison
Quick math
Split the number before the number anchors you.
Enter rough numbers from a letter of intent or draft purchase package. This is not valuation advice. It is a pressure test for whether the "premium" is really practice value or compensation for staying locked in.
Earnout, holdback, and rollover equity that needs separate diligence.
DSO comp minus market comp over the required stay period.
Headline less at-risk value, adjusted for the employment comp gap.
In this example, the clean comparison proxy is below the independent-buyer offer.
What to ask before treating it as a premium
Separate closing cash from escrow, holdback, seller note, contingent earnout, and rollover equity. They do not carry the same certainty.
Price the required post-close role like a job: years, days, production target, hygiene dependency, collections formula, benefits, termination rights, and clinical control.
Ask what happens if demand softens, staff leave, financing falls through, payer mix changes, or the buyer's systems damage the practice you are supposed to keep producing inside.
Rollover equity is not the same as cash. Ask about share class, redemption rights, dilution, debt above you, management fees, transfer limits, and what happens in a recap or failed recap.
How to use this in a deal conversation
- Ask for a written allocation of cash at close, escrow, earnout, seller note, rollover equity, and employment terms.
- Model the required work period as a separate employment contract, not as a footnote to the sale price.
- Compare the clean asset value proxy to a dentist-to-dentist sale or other independent transition path.
- Have valuation, tax, legal, and transition counsel review the allocation before the headline number anchors the room.
Educational only. This worksheet is not legal, tax, valuation, investment, or employment advice. DSO structures vary, and some sellers may make rational decisions to accept them. The point is to know which dollars are clean, which dollars are contingent, and which dollars are really payment for staying in the chair.