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Dental M&A Market Update...

Posted by Kevin Cumbus on Apr 29, 2021 11:04:00 AM

What's Happening in the Space Today...

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The M&A markets are white hot, and our clients have been the beneficiaries of it.

In the last 30 days, TUSK has closed 6 transactions resulting in over $160,000,000 of Transaction Value to our clients.  Our clients have enjoyed multi-generational wealth events for their families are partnered with premier DSOs and Private Equity Groups that will likely result in well over another $100,000,000+ in value once their new partners recapitalize / sell their businesses. 

These deal deals included both large solo practice deals and large groups in both the GP and Specialty Dental sectors.

Some key takeaways from these transactions include:

Single Location Transactions

  • All of the single location transactions had revenues of over $4,000,000 and EBTIDA of $1,000,000+
  • Average exit multiple of 5.98x on TTM EBITDA resulting in transaction values of close to 200% of collections.
  • In one transaction, our client received the highest multiple ever paid by a DSO in the history of their business for a single location.

 

Group Practice Transactions

  • All groups had revenues of between $6,000,000 - $17,500,00 0 and COVID- Adj EBITDA ranging from $1.0M - $10.5M
  • All deals were extremely competitive and exceeded valuation expectations.
  • Group specialty traded at a 1-2x premium to already high GP multiples.
  • There is solid and growing demand for Medicaid businesses.

What You Need to Know

  • Although GP deals trade at historically high multiples, specialty transactions continue to command a higher multiple from buyers.
    • We have an Oral Surgery Group in market where the offers range from 9-11x
  • Demand from buyers had never been higher:
    • We took a single location deal to market this week and are in the process of working with 11 buyers would are looking to submit bids.
    • This deal will be oversubscribed and result in a bidding war.

U.S. Economy

view-of-the-resolute-desk-seen-during-an-early-preview-of-news-photo-1611247377.Over the past two weeks there has been a lot of news about President Biden’s $1.8 Trillion proposal to solve for a growing deficit in the U.S. budget and to provide stimulus and aid for most Americans.

It is a robust plan, but will needs funding – where will the money come from?  Taxes.

Catherine Lucey and Richard Rubin of the Wall Street Journal reported on April 28. 2021:

To pay for the new programs, the administration proposes raising the top income-tax rate to 39.6% from 37%. For households making more than $1 million, Mr. Biden would also raise the top rate on capital-gains and dividends to 39.6% from 20%. Including existing payroll and investment taxes—each 3.8%—the top rates on wages and capital gains would reach 43.4%, up from 23.8%. (See Full Article Here)

Last week when this information began to trickle into the market, it triggered a massive selloff in stocks.  Investors wanted to go ahead and lock in their gains at the current, lower tax rates that what is expected around the bend.

Join us in Denver, CO on July 28th, 2021 at the Dykema DSO Conference for an inclusive look inside what's happening in the M&A Markets today.

Learn More About the 2021 TUSK M&A Workshop!

Exclusively for businesses that are not yet backed by Private Equity funding. 

What Does This Mean for YOU?

We have said it before (See article here), but if you are considering a sale of your business in the next 3 years, you need to strongly consider a sale this year.  By our calculations, assuming multiples remain the same, you will need to grow your EBITDA by close to 20% year over year to net the same after-tax proceeds when comparing a sale in 2020 compared to a sale in 2021 (assuming Biden’s tax changes occur effective January 1, 2021).

If you are thinking about selling your large practice or group in the next 3-5 years, we strongly recommend that you connect with us today to allow us to work through a complimentary evaluation for you and provide you a Clear Price where we are certain that your deal will trade at or above.

We are hosting a webinar on this topic Tuesday, May 18, 2021.  Join us to learn more. In the interim, if you want to connect with us, you can book a call with us here: Book A Call with TUSK! 

Curious What Your Group Is Worth? Schedule a Call with a TUSK Advisor!

About TUSK Partners: TUSK Partners provides industry-leading resources to group dental practices and DSOs. We help you MAXIMIZE the value of your Life’s Work.  We work with large solo practices (over $3M in revenue) and Group Practices.  For an overview of our services, please click HERE or visit our website, blog or podcast.

Tags: Dental Practice Brokerage, Dental Practice Selling, Selling your dental practice DSO, how much is my dental practice worth?

TUSK Partners

We help you START, GROW and SELL your Group Dental Practice or DSO.

TUSK provides Industry-Leading Resources to Group Dental Practices and DSOs, such as:

  • Full Day Deep Dive
  • "2nd Stage" Financing
  • Modular & Strategic Consulting Services
  • Exit Strategy

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