Last week over 1,300 attendees descended upon the Gaylord Rockies Convention Center in Denver, CO for 3 days of conferences, networking, and good old fashioned fun. From industry panels and educational workshops to fireworks and axe throwing, Dykema’s Definitive Conference for DSOs was this summer’s hottest meet-and-greet event for dental industry professionals and private equity groups. Some of CureMint’s very own were in attendance, and below we’ve compiled the key points from an action-packed week.

1. It’s a seller’s market

Across the DSO universe it’s a white-hot seller’s market for mergers and acquisitions. While the COVID-19 shutdown may have tempered sales last year, 2021 is off to a blistering pace with investors and private equity groups paying top dollar for dental practices. Competition to buy dental practices is as fierce as ever, and cheap interest rates have added fuel to the fire as lenders inject lots of available debt capital. 

On the sell side, the dental industry is continuing to experience an influx of institutional capital and private equity-backed platforms resulting in the consolidation of dental practices. Dental practice M&A firms are handling more sophisticated deals, as well as those for specialty practices such as endodontics and orthosurgery. And for sellers looking to avoid higher capital gains taxes that are likely next year, there is tremendous pressure to get deals done in the next few months.

2. A long runway for growth

The consolidation of the dental industry is not over by any means, and there appears to be plenty of room for further scaling within the sector. A repeated phrase by many of the experts at the conference was that we’re only at the “tip of the iceberg,” or “bottom of the 3rd inning,” with lots of runway ahead. The $160 billion dental market still has lots of untapped potential, and private equity groups are more enthusiastic than ever about the industry’s prospects.

3. Culture is key

When it comes to private equity and DSOs, it’s not all about EBITDA. The most common theme at the Dykema DSO conference can be boiled down to one word: culture. What is your culture like? Can you retain your doctors, dental assistants, hygienists, and front office staff? Personnel turnover is one of the most common challenges for DSOs, and a business where employees are leaving constantly is not scalable. By focusing on the patient experience and creating an environment where people want to come into work, DSOs are working to create a better culture that leads to improved patient care. 

4. Best value is not always the highest price 

It may seem counterintuitive, but experienced investors understand that the best overall value is not necessarily the highest price. Serial DSO investors said that they look for dental practices that already have a strong operational infrastructure in place because standard operational processes make it easier to scale. Investors are also looking for practices that have a good culture in place, where the office staff is mission-driven and focused on providing top notch healthcare for their patients.

5. Women in DSO

One of the great highlights from the 2021 Dykema Definitive Conference for DSOs was the official launch of Women in DSO, an organization committed to serving as a platform to advance and promote bright women leaders across the DSO space. With a dynamic speaker panel and keynote presentations, Women in DSO helped to bring the gender equality conversation to the forefront of the dental industry. 

More than half of all dental school graduates are female, yet most of the industry’s corporate boardrooms and DSOs are lacking in diversity, equity, and inclusion. So how should CEOs and decision makers go about adding more women to positions of power? As gold-medal Olympian, World Cup champion, and Dykema keynote speaker, Mia Hamm, put it: Just do it! “Businesses should represent their customers,” said Hamm. “We’re more alike than we think – if we just get to know each other, I think we’ll find more similarities than differences.”

The big picture and final thoughts

Ultimately, the COVID-19 pandemic and resulting business shocks have changed the game for DSOs and dental practices. Technology has advanced in a big way, cramming 5 years of innovation into just 6 short months, and trust in business is higher than ever thanks to a rapid supply chain response that stepped up to deliver essential goods and services to many in need.

So what’s in store for the next 6-12 months? The current business climate suggests higher valuations, increasing consolidation, and greater operational efficiencies. And if the turnout and enthusiasm at Dykema’s DSO Conference is any indication, the future is certainly bright for the dental industry. We hope to see you there next year!