Unless you’ve been completely tuned out from the news lately, you’ve probably noticed the constant drumbeat of economic uncertainty. Every day seems to bring a new prediction about what’s slowing down, breaking down, or heading in the wrong direction. And if you’re thinking about selling your practice, it’s only natural for that noise to get your attention. It creates hesitation, maybe even a little anxiety. The best way to deal with that isn’t to ignore it. It’s to understand what’s actually happening. You’ve likely seen the headlines suggesting the DSO wave has come to a stop. In my view, that’s not accurate. Has it slowed? Yes. Has it adjusted course? Absolutely. But it’s still moving forward. And if you look at what’s happened over the last several years, it starts to make a lot more sense. In the late 2010s and early 2020s, interest rates were extremely low. Money was cheap, easy to access, and that fueled a rapid expansion of DSO activity. Private equity groups were moving quickly, acquiring practices at a fast pace. A big part of the value creation during that time came from arbitrage, buying at one level, growing, and then recapitalizing at a higher level. Growth through aggregation was the name of the game. And for many groups and their investors, it worked very well. Then interest rates rose, and that changed the entire equation. Financing became more expensive. Lenders became more cautious. Buyers started paying closer attention to risk. At the same time, some DSOs found themselves carrying more debt than was comfortable in a higher-rate environment. HAS THE DSO WINDOW CLOSED … OR JUST SHIFTED? What to Really Expect in Today’s Dental Transition Market
Most practice owners say they want options someday to slow down, step back, sell, partner, or transition without stress. But very few owners are actually building those options inside their own practice. The smartest succession strategy is often already standing in your building in the form of an associate who grows into ownership the right way. Internal succession is not about paperwork. It’s about people. It’s about identifying someone who does not just want a job, but wants a future, someone who doesn’t just clock in, but cares what happens to the practice when you’re not there. THE ASSOCIATE SHOULD BE GRO RIGHT NOW
Not surprisingly, the pace of acquisitions slowed.
But here’s where things get interesting. The focus has shifted. Today, the most attractive DSOs aren’t just the ones growing quickly. It’s the ones that can actually operate well: those that can improve revenue, increase profitability, and create consistent year-over-year performance across their practices. In other words, execution now matters just as much as expansion. We’re also starting to see activity pick up again. Deals are getting done. Interest remains strong. And many insiders expect that pace to continue increasing, especially if and when interest rates begin to ease. And that makes your role as a seller more important. Just like there are excellent private practices and average ones, the same is true with DSOs. Some are well-run, well-capitalized, and focused on long-term success. Others are still figuring it out. Knowing the difference can have a major impact on your outcome.
That kind of associate doesn’t happen by accident. You shape them.
The associate you should be grooming right now is not necessarily the most productive one. It’s the one who thinks like an owner before they ever own. They ask questions about systems. They care about patients staying, not just being seen. They notice when the schedule breaks
So, where does that leave us?
Is the DSO model over? Not even close. Is it under pressure in certain areas? Yes. Did you miss your opportunity? Absolutely not.
Are DSOs still buying practices? Without question.
12 · DentalGrowthAndExit.com
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