About one-third of all dental practices are now consolidated, a trend that has accelerated rapidly since 2015, according to a July 15 report from business law firm Barnes & Thornburg published in The National Law Review.
Here are nine more notes from the report on the dental industry’s consolidation and private equity impacts:
- The average retirement age for dentists is 69 years old, but retirements are accelerating as the practice ownership landscape becomes more complex and capital-heavy.
- Industrywide group ownership has increased from 10% in 2022 to 18% today, and estimates project it to reach 25% over the next 10 years.
- With dentistry becoming more consolidated, practice owners now have the opportunity to sell or transition their practice to capitalized institutional buyers rather than traditional individual successors to maximize their financial outcomes.
- The dental sector is still fragmented compared to other healthcare professions, making many acquisition targets for roll-ups available.
- Dentistry is typically considered more recession-resistant than other healthcare industries, making it a safer investment for institutions.
- Consolidation often drives improved margins for dental practices through shared administrative responsibilities, centralized procurement, standardized protocols and implementation of new technologies.
- More practice owners are motivated to sell as they reach retirement age, with increased administrative and regulatory burdens also making owners more willing to sell.
- Private equity firms and DSOs have large amounts of available capital and are looking to spend it on healthcare platform investments.
- Dental practices with strong patient bases and operational systems are currently being valued at a premium.
