DSOs are facing new challenges in 2026, driven by an evolving M&A environment and increased public scrutiny. However, the tide could turn later this year for market factors to lean in their favor.
Ten updates:
1. Acquisitions have been the primary growth strategy for many DSOs over the last decade, with low interest rates and investor interest fueling this activity. However, higher rates and operating costs have led to financial challenges for several groups in recent years. LADD Dental Group said organizations that grow rapidly without appropriate support systems in place, such as operational infrastructure and clinical alignment, experience additional challenges. The group noted that future success for DSOs will likely rely on operational enhancements, including regional density, doctor support, clinical leadership and sustainable financial structures.
2. Sarasota, Fla.-based Dental Care Alliance and Morrisville, N.C.-based Affordable Care have reportedly transitioned into lender control following restructuring challenges. Matt Hendrick, Co-Founder of Elevate Dental Partners, said these updates could signal the end of the “growth at any cost” era in the industry. Now that DSOs’ financial models are being tested, Mr. Hendrick said organizations are shifting their focus from network expansion to building strong operational structures, including investments in technology and leadership development. DSOs are also prioritizing regional density over a more scattered national presence, along with financial models that support sustained growth.
3. Sixty-nine percent of DSOs expect to increase their acquisition activity this year, but fewer available practices could put a wrench in those plans, according to TUSK Practice Sales’ “Dental Market Report” for the second quarter of 2026. The DSO field is experiencing a high-demand, low-supply environment that TUSK expects to continue for the next nine months. TUSK stated that DSOs will likely become more selective of their deals, placing more scrutiny on financials, operations and practice performance projections.
4. Several states have more than 40% of active dentists aged 55 and older, representing one of the largest potential seller pools in the dental M&A market to date. This means the market could soon shift to favor DSOs once those dentists begin the sales process, TUSK reported.
5. Private placement memorandum exit counts increased by 57.1% last year, which TUSK said has created liquidity that is being redeployed into new acquisition cycles.
6. Seventy-eight percent of DSOs anticipate recapitalizations within the next 12 to 36 months.
7. DSOs are choosing to walk away from deals over provider risk and clinical continuity issues, including insufficient staffing and over-reliance on a single producer. More DSOs are now requiring a minimum 5-year post-close employment term to close a deal.
8. Several DSOs have begun to invest more in de novos for the unique benefits these offices bring. Launching new practices is often seen as a way for DSOs to maintain consistency and growth across their brands. Additionally, de novos can be used as a cost-saving strategy for DSOs that want to continue expanding their network in a tough macroeconomic environment. They can also help DSOs build their presence in a new market and lead to partnerships with existing practices later on, several execs told Becker’s.
9. Several states have introduced legislation to limit corporate entities’ ownership of dental practices and their influence on clinical decision-making. Organizations have also spoken out against corporate dental ownership to protect patient care and clinical autonomy.
10. The percentage of dentists affiliated with private equity has nearly doubled over the course of six years. PE groups have specifically begun to target smaller DSOs and oral surgery-focused organizations for their unique opportunities for growth.
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