Deal Analysis: The "Stable" Dental Practice (Insolvent)

lender profile

February 17, 2026

by a lender from Florida Atlantic University - College of Business in Boca Raton, FL, USA

Analyzed a General Practice teaser this morning. Ask: $836k (4x SDE). Narrative: Stable cash flow / safe asset class. Reality (Triage Results): Revenue: -42.7% YoY ($2.4M → $1.3M). Liquidity: Current Ratio 0.34. Solvency: EBITDAR ($117k) covers only 49% of Rent ($238k). The business is structurally insolvent. The broker manipulated the add-backs (adding back owner comp) to mask that the business cannot physically pay its lease. This isn't a turnaround; it's a bankruptcy. Stop modeling upside cases on distressed assets. Kill the deal at the rent line. DM me if you want the Triage Model I used to catch this.
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Reply by a searcher
in Raleigh, NC, USA
We see this also with grossly understated rent. Just looked at one for a manufacturing business with 125k sf warehouse on 10 acres and they had 12k figured in for the annual lease. Seller owned the property but it was not part of the sale. EBITDA looked great until that was corrected.
commentor profile
Reply by an admin
from Massachusetts Institute of Technology in Portland, OR, USA
^redacted might also be able to help with Dental.
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