Overview
Driven by regulatory efforts, market forces, and major structural changes, growth and consolidation has dominated U.S. health care for more than a decade.
All sectors of the health care market are experiencing investment and buyouts, with more and more large superregional and national platforms being established. Dental and specialty dental practices have very much been a part of this growing trend for several years.
Dating back to the late 1990s with the inception of Aspen Dental, dental care has been a long-time point of investment interest for private equity. As funds continue to flow to a range of healthcare specialties, PE attention has been focused on specialty dental practices such as endodontics, periodontics, and oral & maxillofacial surgery.
Dental practices share many characteristics with other physician specialties that have experienced successful consolidation waves. In fact, other than eye care, dental has probably been among the most active target for outside investment. Private equity firms are looking to create value through revenue and cost efficiencies driven by the growth of geographic scale, expansion of service offerings, operational efficiencies and negotiating enhanced reimbursement rates with commercial payors. In 2021, transactions within dental sub-specialties gained steam through tuck-in partnerships with established platforms, and deals that led to newly-established entities like U.S. Endodontics Partners and Specialty1 Partners.
Currently, there are more than 50 private equity-backed dental platforms in the U.S., with groups pursuing regional, or national strategies. Groups that are focused only on sub-specialties are in the minority, allowing dental practices the luxury of having a wide range of established organizations to choose from. As the market continues to consolidate, and new platforms continue to form, the window to “control your destiny” will narrow for dental specialties.
Our team has successfully guided several dental and oral surgery practices through the private equity process. There are several steps that we take to ensure successful outcomes for our clients, these include:
- Develop the appropriate financial modeling to position maximized cash flow and “credit” for ongoing initiatives that are driving growth
- Determine the right mix of potential buyers (including both strategic acquirers and private equity groups) and implement a strategy to reach them
- Managing buyer marketing, bid solicitation, and negotiation
- Position the client to meet relevant potential buyers with strong offers that address cultural fit, strategy, and alignment
- Manage the transaction process to maximize leverage with potential buyers
- Negotiate key economic and structural deal terms, leveraging PGP experience within the dental specialties
- Facilitate all due-diligence pre-closing to ensure a seamless process that does not take away from the day-to-day business while ensuring the highest probability for a successful close
- Maximize financial results for shareholders while maintaining clinical autonomy
