How DSO consolidation trends are changing

The DSO consolidation frenzy is ramping up, and leaders should keep key trends in mind.

Elliot Zibel, CEO and co-founder of Select Dental Management spoke with Becker's May 11 about how consolidation trends are changing the DSO space.

Editor's note: Responses have been lightly edited for length and clarity.

Question: What are some of the most prominent trends you are seeing in the DSO space today?

Elliot Zibel: I think what we're starting to see is consolidation amongst bigger groups and smaller groups. Traditionally, you've seen the DSOs kind of growing and taking share. Mid-Atlantic and Western Dental combined, and now they're 500 plus practices. I think we're going to start to see more of that type of consolidation because it's harder to move the needle for these bigger groups and to drive growth. There is substantial cost energy that makes it very financially attractive for some of these partnerships to happen.

If that happens, the other trend you're going to see is not just consolidation amongst bigger groups but regional DSOs being acquired by some of these larger groups. I think they're going to be able to pay higher valuation multiples based on synergies.

Traditionally what would happen with the private equity groups is the buyer is always willing to pay the most for assets. But I think you're starting to see that variant of strategic valuations versus private equity. It's an interesting dynamic from a consolidation perspective.

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