What’s Slowing Both DSO and Private Transactions Headwinds in the Dental Practice Sales Market
4. Costs are up and margins are feeling it. Expenses have gone up. You already know that. Staffing is tighter, especially with hygienists, and wages have followed. Supply costs have increased. Some materials are more expensive due to tariffs. At the same time, insurance reimbursements haven’t kept up. All of that puts pressure on margins, and margins are what buyers are looking at first. Even a strong practice can get discounted if a buyer feels those margins aren’t stable going forward. 5. Deals are getting more complicated. This is something I spend a lot of time talking through with doctors. Deals today are often more complex than they used to be. Instead of a straightforward sale, you’re seeing things like: • Earn-outs tied to performance • Equity rollovers • Multiyear employment agreements
For a long time, this was a very easy conversation to have.
For more than a decade, the dental practice sales market had a great run. Private equity money poured into dentistry. DSOs grew quickly. Valuations kept climbing. And for many owners, selling a practice became very attractive. That’s still true today, but it’s not quite as simple anymore. Strong practices are still getting strong valuations. But there are some real headwinds right now, things that are slowing deals down on both the DSO side and the private buyer side.
Let me walk you through what’s really going on.
1. Interest rates changed the game. This is probably the biggest factor, and it affects everything. A few years ago, money was cheap. DSOs could borrow easily, and that allowed them to be aggressive when buying practices. That’s a big part of why valuations climbed the way they did.
In many cases, part of your payout depends on what happens after the deal closes. That can work well in the right situation, but it also introduces uncertainty. And for doctors thinking about retirement, the idea of staying on for several more years can change how attractive a deal really is.
Then interest rates went up. Now the same practice has to support a more expensive loan. That means buyers simply can’t pay what they could before. So, what are we seeing? More discipline. More scrutiny. Sometimes lower multiples. And more deals structured with earn-outs or equity instead of large upfront checks. Private buyers feel this, too. A young dentist today is looking at much higher monthly payments than someone buying just a few years ago. That alone can shrink what they’re willing, or able, to offer. 2. Buyers are being pickier. Another shift I’m seeing pretty clearly is that buyers are more selective. DSOs, in particular, are focusing on practices that are already running well with strong margins, good systems, and clear growth potential.
6. Tax and regulatory changes add another layer.
There’s also some uncertainty on the tax side. Changes to deductions, surtaxes, and pass-through structures all play a role in what you actually keep after a sale. And since your practice is likely your largest asset, even small changes here can have a meaningful impact.
A Market That’s Slower, but Still Moving Now, with all that said, I don’t want this to sound like the market has stopped. It hasn’t.
If a practice is outdated, has a weak hygiene program, or depends too heavily on one doctor, it’s going to have a harder time attracting attention. This is where the gap is widening. Top-tier practices are still commanding strong multiples. But average practices? They’re seeing more modest numbers and fewer buyers competing for them. The days of “just about any practice” getting multiple offers are mostly behind us. 3. Fewer dentists want to own practices. This is a quieter shift, but it’s a big one. Fewer dentists today are choosing ownership. We’ve seen private practice ownership steadily decline over the years. And that changes the exit landscape quite a bit. It used to be common to bring in an associate and eventually transition the practice to them. That path is still there, but it’s less reliable than it used to be. Younger dentists are carrying more debt. Many prefer the stability of working within a DSO or group rather than taking on the risk of ownership. And with more than half of graduating classes now female, and statistically more likely to work part time, ownership just isn’t the default goal it once was. What that means for you is simple: If you’re hoping for a private buyer, the pool may be smaller than it used to be.
There is still strong demand for high-quality practices. DSOs are still buying. Deals are still getting done. But the environment has changed. Buyers are more careful. Financing is more expensive. Deals take more thought and more structure. And because of that, preparation matters more than it ever has. Strong numbers. Efficient operations. A solid hygiene program. These aren’t “nice to have” anymore. They’re expected. If you’re thinking about a transition, the biggest mistake you can make is assuming the market will carry you. It won’t. But if you prepare properly, understand what buyers are looking for, and go into the process with the right guidance, very good outcomes are still available. Just be ready for it to take a little more time and intention than it did a few years ago.
Stan Kinder - (703) 298-1690 · 9
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