DSO Talk from Voices of Dentistry, with Alan Mead & Brian Colao
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Bulletproof Dental Practice Podcast Episode 54
- Should you have a DSO?
- If you don’t have a DSO and you’re a doctor owned practice, who can you sell to? You can only sell to other licensed dentists in your state, and that’s a very narrow, deflated market that is getting smaller every day. If you have a DSO your market is the world.
- A DSO deal with established DSO might pay 5-7x EBITDA and is a low-risk deal.
- A private equity deal will require ongoing involvement, and is higher risk, so may pay very high single digits to double digits.
- Private equity deals are performance based.
- There’s an evolution and consolidation in the dental marketplace. The evolution is from doctor owned single practices to DSO’s. The market is being flooded with private equity funds as it allows non-dentists to make money in the marketplace.
- The market saturation of DSO’s is about 10%. There is a lot of runway, and the industry is very fragmented. This means that saturation is a ton of value left to harness in the dental market.
- Seek out education about how the market is changing so you can react and best position your organization.
- Ten years from now there will be very limited opportunity for solo practitioners. If you have eyes set on being a solo practitioner, you need to understand the transition and have a plan. Only the rock star practitioners will thrive on their own.
- Patients are becoming more and more demanding. Consumers don’t really care who owns their dental office.
- DSO’s are in the third generation of progression.
- The highest valuation in the DSO industry is Deca Dental. 18.2x!
- DSO’s are trying to implement one-stop shopping. There’s a lot of upside as a practitioner in working within a one-stop shop style practice.
- It’s not just corporate DSO’s looking to get into the dental marketplace, existing industry suppliers are finding ways to reach consumers directly.
The Cleveland Clinic Way by Tony Cosgrove
“Peer pressure makes dentists better.” Dr. Craig Spodak