... continued from Page 3 four as it does on week one? Buyers ask themselves some version of that question, even if they never say it out loud. Team structure can raise concerns as well, especially when roles aren’t clearly defined or compensation has grown without accountability. Long- tenured teams can be a strength, but only when expectations are clear and performance is measured. Buyers get cautious when loyalty has replaced structure, because fixing that after a transaction is harder and riskier.
Finally, buyers often hesitate when the owner hasn’t thought through transition expectations. Uncertainty creates friction. If it’s unclear how long you want to stay, what role you want after the sale, or what success looks like post-transaction, deals tend to slow down and valuations soften. None of these issues show up neatly on a P&L. But every one of them affects value. Most dentists don’t discover these red flags until they’re already deep into a conversation where leverage matters. By then, options often feel narrower than expected, and fixes become reactive instead of strategic. The strongest practices don’t wait for a buyer to point these things out. They look at their practice through the same lens buyers use, long before a deal is on the table. When you understand why buyers walk away, you’re in a much better position to make sure they don’t. You do that by reducing uncertainty, one system, one number, one decision at a time.
Then there’s growth.
Interestingly, buyers don’t walk away because a practice isn’t growing fast enough. They walk away when growth looks accidental. When there’s no clear reason revenue has held steady. No intentional plan behind patient
flow, case mix, or marketing. Stability without strategy makes buyers uneasy.
One quiet question buyers ask themselves is, “If nothing changes here, what does this practice look like three years from now?” If the answer isn’t clear, growth starts to feel fragile.
Transition Market Update YTD 2025 and Into the Future
Over the past year, DSO acquisition slowed modestly, a trend that carried through early 2025. The primary driver was interest rates. Private equity–backed DSOs rely on leverage, and when the cost of capital rose sharply, the math changed. Deals still happened, but buyers became more careful, and the pace cooled from the buying frenzy many dentists had grown used to seeing. That perspective matters. Even with a more cautious environment, there were more than 200 private equity–funded dental transactions in 2025. That remains roughly four times the transaction volume seen in any other health care services sector. Dentistry continues to stand out as one of the most attractive spaces for institutional capital. Industry forecasts still project the DSO market growing from approximately $27 billion in 2023 to more than $450 billion by the end of the decade. If those projections hold, transaction activity will remain strong, particularly as interest rates begin to stabilize and eventually move lower. Buyer interest has remained concentrated in specific areas. Specialty practices, especially oral surgery, continue to command strong attention, as do general practices with consistent growth and healthy net income. Buyers are still active, but expectations are clearer, and underwriting standards are tighter than they were a few years ago. What has changed most noticeably is deal structure. As capital became more expensive, buyers adjusted to manage risk. Earn-outs, installment payments,
and contingent components have become more common. At the same time, buyers are placing greater emphasis on operational efficiency. Growth through acquisition alone is no longer enough. Practices that can demonstrate year-over-year same-store growth and disciplined operations are the ones attracting the strongest interest. Selectivity has increased as well. Practices with a documented history of growth and a credible plan to sustain that growth after a transaction tend to attract multiple bidders. Practices that are flat or drifting may still sell, but they often face fewer options and less favorable terms. You may have also seen headlines about a small number of DSOs entering receivership. These stories are sometimes framed as evidence that the DSO model is broken. That conclusion doesn’t hold up. There are roughly 1,000 DSOs operating in the U.S. today. A few dozen failures represent a very small percentage of the total. Every industry has underperformers. Dentistry is no exception. What those situations do underscore is the importance of due diligence. If part of your consideration includes equity in a holding company or deferred compensation, the financial health and leadership of the buyer matters. This is where experienced advisors and strong legal counsel become critical to protecting your outcome. Valuation levels through 2025 have generally held steady. General practices have typically traded in
the 5.5x to 7.5x EBITDA range, with higher multiples reserved for exceptional opportunities. Specialty practices often command multiples roughly two turns higher. Traditional dentist-to-dentist transactions continue to range from 60% to 85% of gross revenue, largely due to lending limits imposed by banks. Those lending constraints haven’t changed, but the buyer pool has. Younger dentists are waiting longer to buy, often because of educational debt. At the same time, the profession continues to shift demographically, with women representing a growing share of graduates and, statistically, showing less interest in ownership than prior generations. None of this means selling to another dentist is no longer a viable path. It remains one option. It does mean the process may take longer, the pool of buyers may be smaller, and preparation matters more than ever. Practices that are positioned deliberately stand out quickly. Those that aren’t often wait longer and accept less favorable outcomes. The takeaway is straightforward: The market is active, but it’s more disciplined than it used to be. And in a disciplined market, preparation is what creates leverage.
4 · DentalGrowthAndExit.com
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