An evolution of thoughts towards DSOs...

Over the past couple of years, I have been lucky to spend a lot of time with my father.  We have been brought together as a family for celebrations and memorials (sadly) over the years.  Each time we get together, he asks me about the ever-changing landscape in the DSO M&A markets.  You see, my father is a pediatric dentist.  He started his practice in 1976, grew the practice to a multi-doctor single location, saw 100+ children a day in the summertime, and ultimately sold his practice to his associate about 7 years ago.  Over the course of my 14-year career in the business of dentistry, my father and I have always talked shop. 

3 Reasons to Sell Your Large Practice or Group Today

(or wait 4+ years to attain the same after-tax benefit)

When demand exceeds supply, prices go up. Today, demand from DSOs and Private Equity Groups (PEGs) far exceeds supply for dental practices and dental groups.  On all deals we have taken to market in 2021, we have noticed a remarkable phenomenon: we have more aggressive bidders than ever (more than 2019) and higher offers than we ever thought attainable.  Below are some real examples of what our clients are experiencing:

2020 M&A Year In Review

As 2019 ended, the M&A markets in the DSO markets were white hot.  Every deal that we took to market enjoyed multiple bids and our clients were continually awarded extremely lucrative valuations for their businesses.  The buy-side was voracious: there were more buyers than ever and new ones appearing every day willing to pay more and more to enter the DSO space.  The debt markets were strong, the money was cheap, and lenders were clamoring for deals.  It was truly a sellers’ market and the valuations kept creeping higher and higher.

Internally, our plan was to scale the business as we were picking up more and more mandates on the sell-side and saw an ever-deepening pool of investors and buyers.

“Everyone has a plan until they get punched in the mouth”

Mike Tyson

Dad’s Story...

Around 2008, my father, Dr. Ben Cumbus, a pediatric dentist from Montgomery, AL, was looking to sell a portion of his practice to an associate. Leading up to that decision to sell, my father worked diligently as a solo doctor each week for over 30 years to serve our city’s children to meet their oral healthcare needs. Although the practice had a humble beginning in a small office park, he moved the business to its permanent location in a beautiful standalone building with a caboose on the front that served as a waiting room for the kids. Over the years, his team and business grew, and the practice (and the caboose) became a bit of an icon in the city.

Whew – what a year! 2019 was a whirlwind of activity at TUSK and in the DSO economy. We saw a significant amount of change, growth, M&A activity and new entrants into the market that it is hard to keep track of. Before we dive into 2019, let’s reflect on how the year started by looking at how 2018 ended:

- We saw transformational growth of some of the enterprise level DSOs including Heartland and Pacific Dental both adding 100 practices or more and NADG growing the number of affiliated practices by 49% in just one years’ time.  New doctor-founded, debt-funded groups were popping up on our radar regularly.

- Attendance at almost all DSO conferences were up big – interest in the space was growing.

- We were getting a call from a new Private Equity Group interested in the DSO space a couple of times a month.

- At TUSK, we sold more practices than ever before, across all specialties at multiples well above our client’s (and frankly our expectations) and worked with well over 70 groups to help them START, GROW or SELL their practice or group.

We are pleased to announce that TUSK Partners was named as one of Axial's Top 25 Lower Middle Market Healthcare M&A  Advisors in 2019.  TUSK Partners is one of the most active M&A Advisors in the Dental Economy and works with dentists, Group Practices and DSOs nationwide.  Today, TUSK Partners represents over $250 million of transactions and continues to see the pipeline grow.  Kevin Cumbus, President | Co-Founder & Managing Director of the M&A Advisory business shared:

"2019 has been a remarkable year for TUSK Partners and all of our clients.  We have been able to achieve exits for our clients that far exceed their expectations and aided in the creation of wonderful partnerships among our clients and buyers in the market.  I am most satisfied with the work we have accomplished with clients who come to us after they have received unsolicited offers from the buy-side.  In every one of these situations, we have been able to bring more buyers to the table, provide our clients better buy-side choices, and driven up the price of their business by an average of 35% and in once case, 56%.  There is no better time to own or sell a practice or group than today." 

The dental industry has recently experienced a tidal wave of emerging group practices.  These emerging groups are creating waves for a number of reasons, but one of the most notable is the staggering dollar amounts buyers are seemingly willing to pay for them.

Have you ever wondered if all it was actually true?  Did your buddy who sold his group really walk away with $50,000,000?! 

Or are there other details behind the dollars?  There are – and we’re going to unpack those details right now.

As we welcome in 2018, many people will be celebrating the New Year with a glass – or bottle – of bubbly.  It’s festive.  It’s celebratory.  It’s tradition.  It also got me thinking…

If 2018 is your year to sell your group dental practice or DSO, what’s the best bottle of champagne you should have in the fridge?  Well, here are the official “TUSK Top FIVE” bottles of bubbly to celebrate the sale of your Group Dental Practice or DSO...

You've heard all of the stories about industry colleagues and fellow dentists making millions selling their businesses.  Is your time next?   Are we at the high-water mark for business valuation?

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