If history has taught us anything, it’s that healthcare consolidation moves in cycles. We’ve seen it before: first with hospitals, then with urgent care, ophthalmology, and other specialties.
Ryan Mingus.
The dental industry is no exception. The first wave of heavy M&A activity has already reshaped the landscape, with early-adopting sellers capitalizing on high valuations and favorable deal structures. Now, we’re on the cusp of the second wave, and those who are prepared will have the most to gain.
The healthcare M&A cycle: A playbook for dental consolidation
Healthcare M&A follows a predictable pattern:
- Early consolidation. The first wave begins with a fragmented industry, attracting private equity-backed groups that identify opportunities for efficiency, scale, and profitability.
- Growth and expansion. The strongest platforms grow aggressively, acquiring practices and optimizing operations to maximize earnings before interest, taxes, depreciation, and amortization, or EBITDA.
- Recapitalization and maturity. Large groups begin their recapitalization process, selling stakes to larger investors or merging with competitors. This leads to an eventual slowdown, until the next wave reignites the cycle.
We’ve seen this pattern play out in medical specialties like ambulatory centers and ophthalmology, where early sellers saw higher valuations, while late-stage sellers faced a crowded market with stricter deal terms. Dental is now following that same trajectory. So, what’s coming next?
The market is poised for a second wave in 2025
The M&A market is directly influenced by three key financial factors:
- Interest rates. The Federal Reserve’s aggressive rate hikes in 2022-2023 slowed transaction volumes, making debt more expensive and limiting deal flow.
- Economic outlook. Uncertainty in the market has slowed down the decision-making process of dental service organizations (DSOs)/private equity groups in recent years.
- Operating environment. Both sellers and existing DSOs have experienced a difficult operating environment and have seen EBITDA/profit margins shrink. This has led to a slowdown of sellers and DSOs going to market in recent years.
Now, the outlook is shifting. Economic stabilization is expected in the latter half of 2025, and as interest rates normalize, capital will begin flowing back into the market. This will put DSOs in a stronger position to deploy capital aggressively once again.
The recapitalization effect
A critical factor driving the second wave of dental M&A is the recapitalization cycle. Pitchbook noted that there are over 37 private equity-backed DSOs that are five or more years into their recap cycle.
We have already seen two meaningful recaps in 2025, as well as a large merger. As recaps happen, those DSOs secure new capital partners; they will be under pressure to grow their platforms rapidly, creating a prime opportunity for practice owners looking to sell.
For dentists considering a transition, this means one thing: You need to start preparing now.
The key to maximizing valuation: Preparation
Timing the market is only one piece of the puzzle when selling your dental practice. The real key to securing the best deal is preparation. The best-positioned sellers have already put in the work -- cleaning up financials, optimizing operations, and working with experienced advisers who understand how to present your practice in the best possible light.
Three things you can do now to prepare in include:
- Clean and timely accounting. Having clean profit and loss statements provided monthly allows you to actively manage your profit, as well as help you through a sales/closing process.
- Simplified real estate. If you rent, have attractive long-term leases in place. If you own, ensure your practice is not cross-collateralized with your real estate, and have a good lease in place.
- Work with your advisers early. Have strategic planning conversations with your sell-side adviser, your financial advisers, your spouse, and anyone else you feel will help you mentally prepare for the next phase of your professional career.
The next wave of dental M&A is coming. Dental practice owners who are prepared can have the opportunity to capitalize on rising valuations and increased buyer competition.
The smartest dental practice owners aren’t waiting for the perfect moment. They’re preparing for it. If you want to position yourself for success in 2025, the time to start is today.
Ryan Mingus is managing director of Tusk Practice Sales and has more than 12 years of sales and leadership experience in the dental and healthcare industry, most recently as the business development director for strategy and optimization at Align Technology Inc. Mingus earned his bachelor's degree in economics and business from the Virginia Military Institute and his Master of Business Administration from the University of San Diego. He also held the rank of captain in the U.S. Army National Guard.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
