If history has taught us anything, it's that health-care consolidation moves in cycles. The dental industry is no exception. The first wave of heavy mergers and acquisitions (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.
A playbook for dental consolidation
Health-care M&A follows a predictable pattern:
1. Early consolidation: The first wave begins with a fragmented industry, attracting private equity-backed groups that identify opportunities for efficiency, scale, and profitability.
2. Growth and expansion: The strongest platforms grow aggressively, acquiring practices and optimizing operations to maximize EBITDA.
3. 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: 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:
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Interest rates: The Federal Reserve's aggressive rate hikes in 2022-2023 slowed transaction volumes, making debt more expensive and limiting deal flow.
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Economic outlook: Uncertainty in the market has slowed down the decision-making process of DSOs/PEGs in recent years.
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Operating environment: Both sellers and existing DSOs have experienced a difficult operating environment and have seen EBITDA/profit margins shrink. This slows down sellers and DSOs going to market in recent years.
Now, economic stabilization is expected in the second 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-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, you need to start preparing now.
The key to maximizing valuation
Timing the market is only one piece of the puzzle. The real key to securing the best deal is preparation. The best-positioned sellers are those who have already put in the work-cleaning up financials, optimizing operations, and working with experienced advisors who understand how to present your practice in the best possible light.
Here are things you can do NOW to prepare:
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Clean and timely accounting: Having clean P&Ls provided monthly will allow you to actively manage your profit and help you through a sales/closing process.
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Real estate: If you rent, have attractive long-term leases in place. If you own, have a good lease and ensure your practice is not cross -collateralized with your real estate.
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Work with your advisors early: Have strategic planning conversations with your sell-side advisor, financial advisor, spouse, and anyone else you feel will help you mentally prepare for the next phase of your professional career.
Those prepared for the next wave of dental M&A will have the opportunity to capitalize on rising valuations and increased buyer competition, and the smartest 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.
