California is the biggest dental market in the country and one of the most particular to sell in. Two things surprise most sellers here: the tax math and the non-compete rules. Here’s what’s different about selling in California, and what isn’t.
The math is the same everywhere
Buyers price EBITDA, not collections, in California like everywhere else. If that sentence isn’t familiar, start with how much is my dental practice worth and come back. This guide covers what’s specific to the state.
What’s different in California
- The tax math is heavier. California taxes income at some of the highest state rates in the country, and that reaches much of what you walk away with. The gap between a well-structured deal and a careless one is bigger here than almost anywhere. What gets treated as capital gain versus ordinary income deserves attention before you sign a letter of intent, not after.
- The non-compete rule flips. California famously refuses to enforce non-competes in employment. The sale of a business is the exception. The non-compete in your purchase agreement is likely to stick, so treat it as real, especially if you plan to keep practicing.
- Ownership rules. California keeps ownership of dental practices with licensed dentists through professional corporations. DSOs operate through management arrangements, and the deal you sign reflects that structure.
- Buyer mix. In the coastal metros, DSOs, regional groups, and individual buyers compete for the same practices. More paths means more ways to match the deal to what you want your life to look like after close.
I'm a dentist, not a lawyer or CPA. Structure, tax, and contract questions deserve professional advice specific to your situation.
What I’d do first
Know your own EBITDA and know who’s actually buying in your metro before you respond to anyone. If you want a second set of eyes on your numbers, send them through the free valuation review. I’ll reply within 48 hours with my honest read.
— Kevin