Dental Service Organizations (DSOs, or, physician practice management companies), have transformed the dental industry, shifting from traditional solo practices to large-scale, professionally managed groups backed by private equity and non-dentist investors. This "Great Evolution" has reshaped not only how dental practices are structured, but also how they are valued and acquired. As a result, DSOs have become a central focus in healthcare M&A.

Driven by private equity, DSOs are actively pursuing growth through acquisitions. The primary consolidation strategy for DSOs involves purchasing the non-clinical assets of practices, allowing dentists to retain clinical operations. This approach offers economies of scale, increased operational efficiency, and access to advanced technologies, such as cloud-based Practice Management Systems (PMS), which are becoming increasingly popular due to their scalability and enhanced security​.

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“Seventy-five to 80% of dental practices will be consolidated in ten to 10 to 15 years.” Brian Colao Leader, Dykema Dental Service Organization group

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Despite only about one-third of dental practices currently being consolidated, the market is ripe for further M&A activity. Brian Colao, director of Dykema's DSO Industry Group, predicts that "Seventy-five to 80% of dental practices will be consolidated in 10 to 15 years." He further explains, "We’re seeing an unparalleled opportunity for expansion as DSOs rapidly scale, driven by the strong tailwinds of patient demand and technological advancements."

As DSOs continue to consolidate practices, the ability to integrate cutting-edge technologies, streamline operations, and navigate regulatory complexities will be key factors in determining the success of future acquisitions​. This ongoing consolidation offers significant opportunities for investors and dental practices alike.