August 6, 2024

In 2023, the dental industry had the most mergers and acquisitions relative to other healthcare fields, with three times as many deals as the second most active healthcare specialty.

However, economic challenges early in 2024 bred uncertainty among DSO execs. Increases in the costs of supplies, staff wages, lab fees and personal protective equipment, as well as rent and mortgages, affected the ability of dental practices to remain financially stable. Moreover, due to increases in the cost of capital as interest rates rose, many DSOs found themselves unable to obtain funding to continue their growth through acquisitions. This led some DSOs to focus on other areas of growth while the economy stabilized. For example, DSOs continued to add new technology, such as guided biofilm therapy and AI, to their practices to support dentists and enhance patient care.

As the slower growth of the first half of 2024 gives way to the latter half of the year (which is historically much more vibrant from a mergers and acquisitions standpoint), DSOs are preparing for a resurgence in practice acquisitions, with interest rates expected to fall as the year progresses. Already, three DSOs have each secured over $100 million of borrowed capital to fuel further expansion. If you have been considering joining a DSO, now would be a good time to take the leap.

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