Transforming a growing pediatric DSO into a scalable, private equity-ready platform

The Challenge: A Practice Without a Clear Roadmap to Increased Profitability

A nine-office pediatric dental service organization (DSO) operating across multiple Midwestern states had ambitious growth goals but lacked the structure to support them. Its offices were spread across rural, suburban, and urban areas, each with different patient demographics, cost structures, and staffing needs.

The owner, a dentist turned CEO, saw the opportunity to increase value and attract private equity interest. However, limited financial visibility and the absence of a cohesive operating framework made it difficult to improve margins or clearly articulate the organization’s growth story.

Internally, the DSO struggled with several obstacles:

• Fragmented, office-level operations with no consolidated performance metrics
• No cohesive procurement strategy
• Limited visibility into production drivers, profitability, and practice-level performance
• Separate back-office systems that were costly and inefficient
• A lack of alignment connecting operational decisions to EBITDA growth

Leadership recognized the need for experienced guidance to build a more efficient, data-driven platform that would support continued expansion and appeal to private equity buyers.

The Turning Point: A Multi-Year Strategy to Build a Private Equity-Ready Platform

It became clear that without a solid financial and operational foundation, the DSO would struggle to reach its valuation objectives. To move from fragmented growth to a scalable, investor-ready model, the organization engaged a trusted advisory team with firsthand experience guiding DSOs through transformation and transaction readiness.

The engagement was structured as a multi-year initiative focused on aligning operations, finance, and technology with long-term value creation. The advisory team brought together specialists across several disciplines:

• Operational Transformation: Industry specialists with direct experience owning and scaling a DSO
• Finance Transformation: KPI development, custom dashboards, and centralized financial processes
• Accounting Advisory: Budgeting and forecasting, P&L structure, and disciplined month-end close
• Transaction Advisory: Valuation modeling, addback analysis, and sell side positioning
• Digital Transformation: Technology assessments and recommendations to support scale

Together, this integrated approach established durable financial and operational systems that could support continued growth. It also connected day to day decisions to EBITDA performance and gave potential buyers confidence that the platform could scale well beyond its current state, positioning the organization for a successful future transaction.

Step One: Building the Financial Model That Defined the Path to Value

The process began by defining the owners’ target exit value and working backward to define the financial and operational levers required to achieve it. This created a clear line of sight from long term valuation goals to daily decision making at the practice level.

The initial phase focused on building a robust financial model that translated strategy into actionable metrics. Key deliverables included:

• A multi-year pro forma model tied to each office’s P&L, providing visibility into practice-level and consolidated performance
• Office-level production modeling based on historical trends, provider hours, patient volume, production per patient, and other key operating data
• Monthly patient per day targets translated to clear daily front desk and scheduling goals
• Industry benchmark-based P&L allocations to identify margin gaps and improvement opportunities
• A rolling forecast that directly linked EBITDA targets to operational behavior and performance drivers

These tools became the DSO’s financial compass, clearly defining the monthly revenue each office needed to reach its EBITDA goals. Leadership used the model to benchmark performance, identify gaps, and focus intervention where it would have the greatest impact.

Step Two: Centralizing Operations to Improve Profitability

With the financial model as the foundation, the team developed a prioritized plan to centralize services, reduce overhead, and improve efficiency. A centralized support office was established to manage scheduling, billing, marketing, and administrative functions throughout the organization.

The practice then introduced a managed service structure, extending standardized core functions to specialty practice partners. This approach further reduced back-office spending, while strengthening operational support across the platform.

Step Three: KPI Dashboards That Connected Finance and Operations

The advisory team developed a visual performance dashboard to unify decision-making across all offices, including:

• Total patient visits
• Days open
• Patients per day
• Production per hour
• Production by service line (implants, ortho, hygiene, etc.)
• Provider-level drilldowns
• Alerts for variances and unscheduled treatment opportunities

These insights helped the DSO understand what a “perfect” day, week, and month look like and where to focus their time to enhance production, efficiency, and operating margins.

The Resolution: Better Prepared for Sale

After years of careful work, the practice hit their original valuation goal. With greater confidence in its growth trajectory, leadership doubled that target and shifted toward scaling the business for a more lucrative exit down the road.

Through a holistic, data-driven approach guided by an advisory team, the DSO achieved:

• Financial Visibility: Owners and investment bankers now had clear insights into revenue, performance drivers, and overall financial health
• Stronger Market Positioning: A credible, data-driven narrative aligned with private equity expectations.
• Lower Costs: Centralized services reduced back-office spending
• Operational Efficiency: Leadership now understands what drives performance, growth, and financial viability
• Path to Transaction: The DSO is now well-positioned for a private equity partnership

With a trusted adviser providing insider knowledge and ongoing support, the healthcare practice exceeded its initial expectations and established a scalable foundation for even higher value creation.

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The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

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