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Provident Healthcare Partners Provident Healthcare Partners

Private Equity Investment in Dental Care

Provident Healthcare Partners
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Published October 2017

Within the dental sector, Provident has a reputation for representing leading dental service organizations (DSO). Former client transactions include Great Expressions Dental Centers’ 2008 partnership with Audax Group, Baystate Dentals’ 2013 acquisition by North East Dental Management, Laser Dentistry for Children’s 2015 transaction with Webster Capital, and Children’s Dental Health Associates’ 2016 recapitalization with DFW Capital Partners. While dental has long been one of the most actively consolidated sectors, merger & acquisition activity within the space has continued at a strong pace. Projected to be a $170 billion industry by 2022, a highly favorable macroeconomic backdrop exists for the dental sector. However, the success of a dental services organization is predicated on its ability to invest in a comprehensive infrastructure, recruit dental practitioners, and diversify service lines.

Several large dental service organizations such as Heartland Dental Care, Aspen Dental Management, and Great Expressions Dental Centers, have greatly benefited from the macroeconomic tailwinds driving the sector. Yet, while many large dental consolidators have benefitted, smaller independent dental organizations have not been able to capitalize on the same scale. In an environment of ever increasing margin pressure and competition, the dental community faces significant challenges. Dentists near the age of retirement are reconsidering whether or not they will be able to realize a return on the time and dollars they have invested in their practices’ ahead of retirement. Early career dentists, saddled with student debt, are considering whether it is worth the risk of financially committing the resources to invest in their own private practices’ with consideration to the opportunity cost of seeking stable employment with a large dental practice. Taking these factors into consideration, dental organizations have begun to look for alternative strategies to grow the equity value of their organizations over the long term.

Report Summary
• Private Equity Investment and Industry Consolidation
• Creating Value Through Private Equity
• Dental Transaction Environment
• Concluding Thoughts

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