DSO buyers are far more selective and want dental practices with committed doctors, diversified services, multiple providers, and growth potential rather than mediocre single-provider practices held together with duct tape. To prepare for a sale in five years, dentists should build strong team culture, implement technology strategically, and view DSO partnerships as long-term growth opportunities rather than quick retirement exits.
- DSOs now pass on capped, single-provider practices as too risky, shifting away from the easy acquisition era of 2021-2022.
- Buyers prioritize committed doctors, diversified procedures, multiple providers, and room to grow over basic profitability metrics.
- Recent interest rate cuts are freeing DSO capital for acquisitions and spurring recapitalization events and potential IPOs among large platforms.
- The DSO market is shifting from a retirement strategy to a long-term growth partnership, particularly attracting younger doctors seeking to scale.
In 2021 and 2022, even mediocre practices drew quality offers from dental service organizations (DSOs). Connor Jorgensen says that era is over.
In this episode of The DrBicuspid.com Podcast, host Kevin Henry welcomes back Jorgensen, a director at Tusk Practice Sales, for a look at what dentists planning to sell in about five years should be doing today. Part 1, on the present-day DSO market, is linked in the show notes and the article.
Jorgensen says groups are now far more selective, and they scrutinize deals more closely after the letter of intent. What they want is a committed doctor, a diversified procedure and provider mix, multiple providers, and room to grow. Some groups now pass on capped, single-provider practices as too risky. Larger groups are acquiring other large groups, and some are choosing a de novo strategy, building their own practices instead of buying.
Most of the doctors Jorgensen works with have a short vision, he says, and he is often the one delivering bad news about what it takes to exit by a given year. He urges dentists, whether they plan to sell in 12 months or 10 years, to step back and look at their business holistically.
On the economy, Tusk follows indicators such as interest rates, and Jorgensen sees recent rate cuts easing debt service for DSOs and freeing capital for acquisitions. He expects more recapitalization events, in which a platform's financial investor exits and a new one comes in, over the next three years, along with talk of initial public offerings among large platforms.
Outside investment, he says, is "flooding the market a little," which he sees as a sign of health. The caveat is that investors want strong platforms, not what he calls a "duct tape DSO" with no connective tissue across its practices.
Value, he stresses, is both quantitative and qualitative. Team, culture, and technology matter. Jorgensen says implementing AI the right way can grow both top and bottom lines, but when he reviews profit and loss statements, he often sees a bigger expense bill without better profitability.
His bold prediction: The DSO market will be seen less as a retirement strategy and more as a long-term growth partnership, with younger doctors using it to scale.
Listen to the full conversation below.
