Hi {{firstname|everyone}},
I have sat in enough investor meetings to know that EBITDA rarely tells the full story of how someone feels about a deal.
On paper, the numbers can look steady. Margins are intact. The model appears to be working. And yet the tone in the room shifts.
When that happens, founders often assume the issue must be financial. But more often than not, the discomfort has everything to do with whether the business feels governable. Investors react to signals about control, accountability, and decision discipline long before the financials actually deteriorate.
For dental practice owners and PE firms building DSOs, this distinction matters because valuation is not just a reflection of current performance but how predictable that performance feels under someone else’s ownership.
Here are 3 risks that you should be aware of and with actionable counter tips to mitigate them.
1. Decision Rights Shape Perceived Risk
In growing DSOs, decision making often remains informal far longer than it should. A founder approves site acquisitions, resolves compensation disputes, negotiates supplier terms, and signs off on capital expenditure because that is how the business was built.
It works while the group is small. It becomes opaque when the group reaches scale.
Investors pay close attention to who actually holds authority and how clearly that authority is defined.
To get that going:
Map decision rights formally across acquisitions, hiring, compensation changes, and capital allocation so that an external party can see who has the mandate to decide and who has oversight.
Document board level approvals and management level delegations so that key decisions are not dependent on unwritten understandings.
Test whether a regional clinical lead or COO can execute a defined budget and strategy without founder intervention, and correct the gaps before diligence exposes them.
Consequently, when decision rights are explicit and enforced, the same EBITDA commands more trust because it looks transferable.
2. Escalation Paths Reveal Organisational Maturity
Every DSO encounters operational friction. The issue is not whether problems exist, but how they travel through the organisation.
In many founder-led groups, issues escalate directly to the top because people know the founder will resolve them quickly. That responsiveness builds loyalty. It also creates concentration risk.
Investors observe escalation patterns closely because they indicate whether the organisation can protect margins without constant top level intervention.
Here’s how you put that to practice:
Define formal escalation thresholds for clinical quality, compliance breaches, and financial variance, and ensure that they trigger structured review rather than ad hoc conversations.
Establish written turnaround protocols for underperforming sites that include timelines, accountability owners, and measurable recovery targets.
Track how many operational issues are resolved at regional or functional levels versus how many require founder or board involvement, and use that data to strengthen middle management capability.
With these checks in place, resilient escalation framework signals that EBITDA can be defended systematically rather than heroically.
Financial models project outcomes. Governance determines whether those outcomes are achievable under stress. Investors look for clarity around who owns outcomes and how performance is enforced.
In some DSOs, accountability is cultural rather than structural. Expectations are understood but not codified. Performance discussions are regular but undocumented. Incentives exist but are not tightly aligned with margin protection or cash discipline.
This ambiguity creates unease during diligence because it suggests that results are dependent on goodwill rather than enforceable systems.
To counter that:
Align site level incentives explicitly with EBITDA contribution and cash collection metrics, and review those incentives annually against strategic objectives.
Implement structured performance reviews for clinical directors and regional managers that tie compensation to measurable operational outcomes.
Maintain clear reporting packs that show variance analysis, corrective actions, and responsible owners so that oversight feels procedural rather than reactive.
When authority is clear and accountability is measurable, governance becomes visible, influencing investor behaviour more than a marginal improvement in earnings.
Get it Right with the DSO Exit 2030 Playbook
At Samera, we work with dental groups to institutionalise these structures early so that growth does not outpace control and performance does not depend on concentration of authority.
If you are serious about building a DSO that investors trust as much as they value, our DSO Exit 2030 Playbook is for you.
It outlines how governance, financial clarity, and operational discipline combine to protect EBITDA and strengthen valuation over time.
Free and fully accessible, read it here:
Cheers,
Arun