{"id":15018,"date":"2025-06-16T07:11:37","date_gmt":"2025-06-16T14:11:37","guid":{"rendered":"https:\/\/www.planetdds.com\/?p=15018"},"modified":"2025-06-16T07:11:43","modified_gmt":"2025-06-16T14:11:43","slug":"how-dental-technology-is-shaping-private-equity-investment","status":"publish","type":"post","link":"https:\/\/www.planetdds.com\/blog\/how-dental-technology-is-shaping-private-equity-investment\/","title":{"rendered":"How Dental Technology Is Shaping Private Equity Investment"},"content":{"rendered":"\n

There\u2019s been a seismic shift in private equity<\/a> (PE) investment in dentistry since interest rates and inflation soared in 2022. Whereas before PE-backed companies grew rapidly through mergers and acquisitions (M&As<\/a>), now investors are looking to back dental groups focused on same-store growth, efficiency through standardization, and low staff turnover.<\/p>\n\n\n\n

Dental support organization (DSO<\/a>) leaders and industry advisors share how expectations around technology, integration, and operational readiness are influencing deal activity. As financial partners scrutinize long-term scalability<\/a> more closely, having the right infrastructure in place has become a defining factor in how DSOs and dental groups are assessed.<\/p>\n\n\n\n

How Private Equity Firms Are Evaluating Dental Groups<\/h2>\n\n\n\n

As private equity firms evaluate new opportunities, they\u2019re placing more emphasis on operational structure and long-term potential. Profitability<\/a> still matters, but it’s no longer the only marker of a strong investment.<\/p>\n\n\n\n

\u201cThe current market environment is driving a return to fundamentals, and the era of just aggregating EBITDA is over,\u201d said Preston Brice, managing partner of Barclay Hill Partners<\/a>, a healthcare-focused private equity firm.<\/p>\n\n\n\n

Many investors are prioritizing deals where companies have a standardized practice management system<\/a>, data analytics platform, revenue cycle management (RCM<\/a>) automation, and patient engagement tools.<\/p>\n\n\n\n

\u201cTech stack standardization is the hallmark of a good organization, and it is a value signal to acquirers,\u201d Brice explained. \u201cIn order to drive maximum value, you need to have integration and organic growth<\/a> in addition to high-quality teams and a proven growth model.\u201d<\/p>\n\n\n\n

Standardized Technology Improves PE Valuation<\/h2>\n\n\n\n

Riccobene<\/a> Associates Family Dentistry is a fast-growing DSO with more than sixty-five affiliated practices. It was one of the only large dental groups<\/a> to secure private equity funding in 2024.<\/p>\n\n\n\n

\u201cIt was obvious throughout our recent quest for a new private equity partner that investors are looking for so much more than profitability,\u201d said Lorri Detrick, president and COO of Riccobene Associates Family Dentistry.<\/p>\n\n\n\n

Detrick emphasized how the group\u2019s investment in modern<\/a>, standardized systems made a meaningful difference in partnerships.<\/p>\n\n\n\n

\u201cThe value of having standardized technology and operating systems was clear to us. Our primary practice management system [Denticon<\/a>] and our data analytics tool [Jarvis<\/a>] provide centralized data, real-time visibility across all locations, and demonstrate operational consistency.<\/p>\n\n\n\n

\u201cThat level of transparency not only streamlined the due diligence process; it helped us command a stronger valuation. Our infrastructure and standardization signaled that we were ready to scale,\u201d said Detrick.<\/p>\n\n\n\n

Why Modern Technology Matters to PE Investors<\/h2>\n\n\n\n

Having outdated technology impacts healthcare deals outside of the dental industry too. RSM<\/a> is a leading provider of assurance, tax, and consulting services to the middle market, which generally refers to companies with annual revenues between $10 million and several billion dollars. <\/p>\n\n\n\n

One of RSM\u2019s clients made a strategic acquisition, then discovered post-sale that the acquired company\u2019s outdated technology<\/a> could not integrate with the buyer\u2019s business applications.<\/p>\n\n\n\n

\u201cIf technology due diligence had been done ahead of close, the client could have negotiated to account for $30 million in upgrade costs or walked away from the deal,\u201d said Jennifer Busse, principal management consultant with RSM.<\/p>\n\n\n\n

Preparing for Dental M&A Transactions<\/h2>\n\n\n\n

While many people were hopeful that 2025 would be the year that private equity investment in the dental industry resumed, experts now anticipate a more substantial recovery in 2026, contingent upon resolving trade issues and a reduction in interest rates.<\/p>\n\n\n\n

There are three critical elements for enhancing practice value, said Brian Colao, the director of Dykema DSO Industry Group<\/a>, a law firm that specializes in comprehensive legal matters affecting DSOs, including mergers and acquisitions.<\/p>\n\n\n\n

\u201cYou need to cultivate a strong organizational culture<\/a> to ensure staff retention. You need to foster positive relationships with affiliated doctors. And you need to leverage technology for operational efficiency<\/a> and growth,\u201d said Colao.<\/p>\n\n\n\n

Rick Kes, a healthcare senior industry analyst for RSM, also sees technology and standardization as early value drivers in a deal. <\/p>\n\n\n\n

\u201cThe benefits that arise through standardization almost always create a positive ROI,\u201d Kes said. \u201cStandardization and building efficiencies through technology is generally the first place we look to help our clients build enterprise value accretion.\u201d<\/p>\n\n\n\n

Set the Foundation for Long-Term Success<\/h2>\n\n\n\n

As private equity firms take a more measured approach to investing, DSOs and dental groups that demonstrate operational readiness, scalability, and tech-driven efficiency stand out. From cloud-based<\/a> systems to automated RCM tools, the right infrastructure can not only improve internal operations, but it can also signal long-term potential to investors.<\/p>\n\n\n\n

Contact Planet DDS to learn how our full suite of dental practice management solutions can help optimize operations, increase transparency, and enhance enterprise value.<\/p>\n\n\n\n

Editor’s note: This article was written by Planet DDS and originally published in DrBicuspid.com<\/a>.<\/em><\/p>\n\n\n\n

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