Ryan Mingus

Good evening, everyone. It looks like we still have a few folks trickling in, so we will get started here shortly.

Ryan Mingus

All right, looks like we have a quorum here. Thank you very much for taking time out of your busy schedules to be here with us tonight. We know that this is a busy time of year, but you know, this is always our favorite presentation to give every year. It’s always great to look back on the year that was and look out to the year that we have coming ahead. So we’ll be sharing a lot of great insights and trends from not just this year, but, you know, kind of the last three years or so, and ultimately helping use that information, along with some very recent news in the market to get a good outlook for you guys for 2026. And with that, I’ll be kicking things off. Ryan Mingus, Managing Director and Partner here at TUSK Practice Sales. I’ve been with the firm for about six years now, but I’ve spent the entirety of my career in the healthcare space, starting out in traditional healthcare and medicine and making my way into dentistry about eight years ago.

Ryan Mingus

Little bit about TUSK for those of you that aren’t really aware of who we are, we are a nationally recognized sell side M&A firm. Started out in the dental industry, and still probably about 90% of our work is in dentistry. So, you might see us in other spaces, but this is really our core competency. We’ve done over a billion dollars worth of dental transactions, and $1.3 billion total transactions for our sell side clients. We have a great mix of investment banking experience and real-world operating experience within DSOs, and we get to bring that to bear for our clients each and every time. We’ve got 14 folks total, with eight of us here in Charlotte, our marketing, business development and leadership teams and our analytics team are here in Charlotte, and then we’ve got folks spread throughout the country, one of whom is Connor Jorgensen, who’s on the call tonight and will be presenting with me.

Ryan Mingus

Just an overview of our team, we were founded by Kevin Cumbus. Dentistry is in his DNA. His father was a pediatric dentist. However, Kevin didn’t follow in his footsteps. He went on to be an investment banker, but after a few years in that space, recognized private equity’s interest in dentistry and felt that he was able to create a business that would add significant value to business owners, to help bridge the information asymmetry gap that sellers, owner, operators like yourself on this call ultimately have when going up against the private equity backed platform or a private equity group whereby you might be an acquisition target. We do not do doctor to doctor transactions. This is all we do, is specialize in private equity or family office type transactions. So we do that one thing, and we do it very, very well, and we’re supported by our analytics team that are really the backbone of our organization, that make our clients businesses look great, and ultimately are going toe to toe each and every day with these private equity groups and all of those kind of ivy league educated analysts that they bring to bear. And you know, I’ll take our team any day of the week up against those folks. And then we also have a mergers and acquisitions team here. That’s the team I oversee. Our responsibility is taking our clients through a marketed process to create a highly competitive environment and bring the spectrum of the landscape of the buyers to bear each and every time for our clients, it’s an arduous process, but they’re highly specialized in what they do, and we’re very acutely aware of what’s going on on the buy side, because that’s all we do each and every day.

Ryan Mingus

So, I think I always like to start out, or recently, I’d like to start out with a little bit of just kind of overview of why private equity is interested in healthcare at all. Think it’s important for you guys to understand why they’re interested in what their goals are, as you’re trying to put yourself in a position to maximize an outcome for you when you go to sell, if you decide to go down this pathway. So, first and foremost, what are the attractive qualities of dentistry and private equity? First and foremost, it’s a fragmented market. I had the opportunity to work with Align Technology as a management consultant, and the CEO, Joe Hogan, always referred to dentistry as the last cottage industry. And I think that’s very true relative to the rest of healthcare. You know, it’s kind of the last industry or sector of healthcare to consolidate. So that certainly is a big checkmark. Additionally, they look for areas where they’re high barriers of entry. So, you guys require high level degrees of education. It’s also a highly regulated environment, and its semi, if not very capital intensive, depending on the type of practice you’re ultimately building. So, all of these high barriers of entry create an opportunity for them to come in, and once they’re in, you know, they’re a little bit insulated from certain competitors. Additionally, they look for high margin, recession resistant businesses. This ultimately, is an assessment of risk. They want lower risk assets, cash producing assets, and dentistry has that in spades. And every single recession, you know, dentistry has done very well. And in fact, you know, the M&A activity coming out of a recession is always much higher in dentistry than probably most other industries. Additionally, you know most of the market is not optimized from an operational or marketing or technology perspective, you know, you might not have the latest and greatest technology because the spend that is required of it in order to keep up to date each and every time.

Ryan Mingus

Additionally, marketing is a very, very difficult thing to measure, and it’s, it’s hard to find folks that are specialized in that, especially when you’re talking about, you know, local level marketing, somebody that has the caliber, the pedigree, to deliver for you. And then additionally, operations. You know, most of the time, the dentist, the owner, is also doing operations. And it’s hard to do both things really well, both be a clinician and an operator. And their goal is to start by, you know, they have an investment thesis, and they go out to raise capital from family offices, endowment funds, pension funds or high net worth individuals. So once they raise a couple 100 million dollars based on their investment thesis, then they want to enter into a fragmented market to create value through scale. So, they begin with buying an initial “platform”. What does that mean? That means it’s one business that has substantial size and scale and sophistication that they feel that they could double or triple in a five-year period. They usually need about $3 million of EBITDA, so not all of our clients qualify to be a platform investment, but many do, and we take folks through that process, and you know, through our time at TUSK, each and every year, with the exception of this year, we have created at least two, and in some cases, five, new DSOs in a given year whereby our clients were that platform investment for a private equity group to start a platform. Then they want to grow aggressively through acquisitions, talking 13-20% annually to grow the business. And recently, there’s been kind of less focus on acquisition, more focus on organic growth, which has been interesting and hopefully good long term for the market. But everybody needs to ultimately get back to M&A because that’s the core thesis of how private equity ultimately operates. Then, once they’ve kind of reached critical mass, they want to centralize applicable services, reduce expenses through purchasing power, leverage technology and operational excellence to improve margin, and then they want to iterate, refine and dress up before they go to market. So this is what we’re advising a lot of folks that start talking to us about is really step five, you know, we give them an assessment of their business today, but then we can give them some marching orders on, you know, how they can iterate on their business between now and the time that they ultimately go to market to set themselves up for success and the greatest possible outcome from a valuation perspective. But they want to do this and produce a 2-4x return to their LPs, or all those folks that they raised money from, and additionally, partner doctors, that initial platform that the doctors that were part of that group, they get to share in that same level of really high returns. Granted, you know, they had to take a risk of being a new platform and starting new business and trusting their business with this private equity group. But the other doctors that partner along the way should, should receive meaningful upside as well, depending on when they entered and relative to the recapitalization event.

Ryan Mingus

And then this is kind of a visual of that, so, you know, year one on the left side of this graph is, you know, the initial acquisition on the far left. And then through the platform launch, they start acquiring pretty rapidly. And then in the middle section, there is really the professionalization. That’s when they start integrating those areas that are going to improve profit margin and really start to make a true business out of it, rather than just an aggregation of offices. And then in the third phase, they want to, you know, add a few really good, strategic, healthy acquisitions. Perhaps they’re willing to pay a premium at that phase because they have a good line of sight into how they’re going to be valued when they recapitalize. And they can really stack some EBITDA there at the end before they exit. And all of that is meant to be done in an average of a five-year period. Some groups get there faster, some groups get there slower, but on average, five years is the goal. So, I think it’s good to take a breakdown of where we are today.

Ryan Mingus

So, this is pitch book data, and this is showing on the far-left dentistry, the dark blue line, are businesses that are greater than seven years into their hold period. So, they’re way beyond that. They’re two years beyond that five-year goal, but within, you know, probably the average. If you’ve got some groups that recapitalize at three years, some groups that recapitalize at seven and some at five. You know, the aggregate, or excuse me, the average, is five. So, it’s not saying that all is lost at seven years. Some of those are beyond seven years. And then you’ve got the light blue line is if they’re between five and seven years into their current recapitalization cycle with their current private equity sponsor. So about 25 at between five and seven and about 20 that are greater than seven years. So, what that tells us is there’s a huge supply of large private equity platforms at the top of the market that are set to have recapitalization events in the near term. And this is, you know, what we’re monitoring closely to ultimately, you know, we feel that there were very few recapitalization events at the top of the market in the last two years because of the interest rate environment. I’ve got some slides to share on that, but this is really kind of important to think about when we’re trying to determine what the outlook looks like. What is the supply of recaps at the top of the market, and what does that mean for our clients that are set to go to market? This is just a good way to look at things by quarter. This anomaly here Q4 of 2021, we worked to close probably 30% of our deals in the last call it six weeks of the year, and many of which were closed on New Year’s Eve. So that was a kind of an anomaly and a perfect storm because of pent up demand and low interest rates and dentistry performing so well.

Ryan Mingus

So where are we at now? Unfortunately, Q3 data wasn’t available in time for this presentation, but Q1 of 25 is the best Q1 in three years. So, we felt really good about where things were and when we were sitting here on this call in 2024 we were very high on what 2025 was going to look like, and it started out just the way we thought it would. With, you know, a great Q1 for the industry, and for TUSK in particular, we closed a lot of deals. So that was pretty indicative of our Q4 to Q1 as well. And then tariffs hit in Q2 and that really put a screeching halt on things. I believe that I’ve looked at other sources beyond PitchBook, and they’ve all indicated that there is a bounce back in Q3. Unfortunately, we don’t have the pitch book data to support that, but I can confirm here at TUSK, we had a bounce back in Q3 with a large amount of deals closing in Q3 that were supposed to close in Q2 but ultimately, you know, buyers came back to the table once they kind of had a feeling of where tariffs were really going to land.

Ryan Mingus

Macro trends driving deal activity. You know, the interest rate environments that rise in early 2022 really impacted a lot of these DSOs in a very meaningful way. Basically required them to stop doing any M&A for a while, really focus on organic growth and sort of professionalization, and then they’ll be able to come back to market once the stars align and they’re able to close some deals and then get their own deal closed, which is what we’re looking out for, inflationary trends. This is a little bit unfortunate with respect to interest rates, they can’t lower interest rates in a higher inflationary environment, because it could just exacerbate inflation. So ultimately, they want to see it around 2% it’s pretty stagnant at around 3% unfortunately, right now, but we still should or could see another cut in 2025 based on some of the things that the FED have indicated, jobs being the other thing that they’re looking at beyond inflation. So, this is kind of where we sit today.

Ryan Mingus

And then I want to give you a look back on 2025 before I hand it over to Connor, you know, kind of looking back to the year that was. So, 2025 the light blue are deals that we closed and dark bluer deals that are pending closing this year. You know, we’re doing this a little bit earlier in the month than we normally do, but we added 13 unique buyers, six of which were the first time that we worked with them at TUSK. And that’s just a testament to how broad our team goes each and every time to bring new blood to the to our clients, businesses. So, each and every time we go to market, that deal, team is scouring the earth to find each and every buyer, and we vet them, and we put them on our back and help them get their deal closed. Because if they’ve never, if they’re a newer platform or slightly unsophisticated, you know, our job is much harder, and our clients rely on us to really carry the water to get that deal done, but we’re happy to do it, and it’s been great for us as an organization.

Ryan Mingus

Additionally, we like to look back on the year and see the breakdown of our deals relative GP versus specialty 2021 was kind of an anomaly year where specialty outpaced GP for the first and only time. And we’re generally 50/50 so kind of third year in a row that this number has been about the same. But it’s always interesting to look at that. And then again, I kind of alluded to this earlier. The first time in history, in the last nine years, we did not create a new DSO whereby our client, well, none of our clients elected to sell to a private equity group to start a platform. We had at least a handful of clients that were greater than $3 million of EBITDA, some upwards of $6 million of EBITDA that we took to market and got deals done, but they did not elect to go with a private equity group. You know, that could have just been seller preference, but I will say private equity in general, the offers they were putting out in this environment, especially after Q2 when, when the tariffs were announced, really, you know, they weren’t as plentiful and aggressive as they were in, you know, kind of the end of 2024.

Ryan Mingus

I fully expect that to change in 2026 so folks that are interested in being the DSO, or the initial transaction with the DSO, I think 2026 will be a great year for that. We were talking about the pending recapitalization events that we have out there. You know that 44 or so number that are greater than five years into their hold period, there were several actual recapitalization events that happened. So, you’ve got Lone Peak, MB2, Smile Partners, Riccobene and Associates, Platinum Dental Services, Dental Corp of Canada, Dental Corp of Canada was a publicly traded DSO on the Toronto Stock Exchange, and they actually were taken back private just about a month ago. Talked to some doctors up there, and, you know, they seem to be happy with it. So, so that was interesting. We saw Park dental go public on the NASDAQ, and, you know, so now we’ve got a publicly traded dental platform again in the United States. It’s not the first time DCA was publicly traded at one point, and several others have been publicly traded over the years. So, it’s not the first time, but it’s definitely the first time in a long time. So super interesting and really excited to see how that plays out between now and the end of the year, and then ultimately how that might impact some other DSOs exit strategy going forward. Um, and Smile Design is worth calling out. They were actually acquired by Heartland. So that was a 60-location group that Heartland acquired. So, we’re kind of far enough along in dentistry that you’re going to start seeing strategics acquire strategics at a higher cliff. It’s happened over the years, but, but I expect that to actually ramp up. And then we’ve got three pending recaps, either maybe one of them, perhaps two of them could get done by the end of this year. And then, if not, you know, early Q1 of next year. So really interested to see how those come out. And as we are talking with our clients, we’re able to, you know, give them a behind the scenes look on all these deals based on our experience and kind of connections to all these deals.

Ryan Mingus

Quickly, I just want to hit on what the market trends were in 2025. So, multiples stayed pretty consistent, not just this year, but, you know, kind of the year before as well. We’re starting to see a little bit of an easing on, you know, cash to equity allocations when interest rates were at their height, buyers were not able to put as much cash forward as they normally would like to. And then the spread between offers, that is, you know, if we have four offers on any given deal, or four highly competitive offers, the spread between the highest and the lowest offer has never been wider. You know, in 2022, 2021, 2019. We really saw all the offers coming in kind of one on top of the other with respect to valuation. And now we’re seeing a wider range, because these interest rates affected every group differently. Some groups, if they had really favorable rates locked in, they’re able to still put really aggressive offers, but others that might have had a variable rate aren’t able to put the same offers forward. Buyer scrutiny: this is really, I think, an overall good thing for the market, but buyers are really taking a much deeper look into company operations, when they’re acquiring businesses and making sure that this is going to fit well into our organization, and they do more diligence to make sure that they don’t get bit or, you know, or swallow a poison pill. So, provider risk, employment terms, the geography of the practices and how they fit into their business, the growth opportunities that exist in the business today, and how easily obtained are those, by hands, as the buyer. And then integration strategy with acquisitions, and what are the synergies with the surrounding practices? Is this a 1+1=3 scenario? And DSOs are really prioritizing risk mitigation over upside opportunities.

Ryan Mingus

And then I’ll, before I hand it off to Connor, just kind of give my takeaways and outlook, but the fact pattern is pretty clear that buyers are retooling their M&A teams. We just got a call from two groups this week saying, “Hey, I’m the new VP of Business Development, or Chief Growth Officer at this DSO, I know we’ve worked with you in the past. I know we haven’t had any deals done in the recent years, but I’ve been hired to pick things up.” So that’s great. Recruiters are calling us for leads on new talent. “Hey, do you know anybody that’s looking, I’ve got three DSOs that have given me mandates.” That’s all great news for sellers in 2026. And then platforms need to acquire to hit their goals. You saw the visual out there, they have to grow through M&A in order to achieve their growth targets. And although they were dormant for the last two years, they have to sprint to the finish line before they get to market. There is some pressure from Washington to lower the FED rate, and hopefully we get one more this year, which would be excellent. And then there were more recaps in 2025 than all of 2024 granted, they’ve been a little bit smaller, but that’s, it’s just great news. You know, we’re trending up into the right with respect to volume. And then several buyers have indicated that there aren’t enough high-quality assets in their pipeline to meet their Q1 targets. What that tells me is we’re now finally starting to get to a scenario where the supply of quality assets is lower than it’s ever been, and you’ve got more buyers coming back to market, which is a recipe for a high supply of eager buyers and a low supply of high quality assets, which means, that it’s a seller’s market for the first time in two years, which hopefully, you know, will continue on, but will bear out in 2026 because that’s what the tea leaves are reading as we sit here in the first week of December.

Ryan Mingus

And then the outlook, it feels like we’re at the bottom of the down cycle, you know the macro environment that is. Dentistry has been pretty, I guess, insulated relative to a lot of other industries. But at TUSK, you know, we’ve been thankful to be growing our business, even as the broader M&A environment has taken a downturn, and dentistry as a whole has probably been less impacted than some other healthcare sectors with respect to M&A. So, we haven’t felt the down cycle quite as much as others, but as a general rule, it’s been a macro down cycle with M&A and healthcare, and we feel that we’re at the bottom, but buyers will need to make up ground to meet investor expectations. You kind of hit on that a couple times. And then we did look at a few different pulse surveys, and I think it’s worth mentioning. The first half priority of the CFOs of DSOs are really, you know, regional M&A, and what that really means is areas that they’re already in, let’s get deeper. Bolt-On acquisitions: you know, what are some really easy wins that we can just add on, that are going to be a value add? Maybe that’s dropping a specialty into a market where we have a bunch of GP, and then the private equity group alignment with management for their kind of long-range strategy. Where do we need to get to and how fast can we get there before we go to market? There’s a lot of more collaboration on that front than there’s ever been. So that’s where we are with respect to the outlook. Couldn’t really be more excited about 2026 because I do truly feel that it’s going to be a turn back to the seller’s market that we saw, you know, kind of starting back in 2018 through 2022. But with that, I’m going to hand it off to Connor.

Connor Jorgensen

Thanks, Ryan, excited to be here tonight. As you were presenting, I had the opportunity to reminisce a little bit on when I used to be an attendee on this webinar and being able to see what was going on in the marketplace, what TUSK was doing, really, from the M&A side of things, so excited to be here presenting to the group tonight, looking forward to getting into really what’s going on in the marketplace from a private practice perspective, that’s driving the DSO consolidation, but also for doctors on the call here, on how you can best position yourself but also protect yourself in a potential transaction moving forward into 2026

Connor Jorgensen

So I’ve been in the dental industry for 15 years now. Originally started at Patterson Dental had a variety of different roles, really focused on operational improvements with a variety of different positions. At one point, I had a $55 million P&L and managed 50 employees. And so, the folks on the call here that have large teams and can understand the stress and frustration of managing a large team, I hear you. I feel you. I lived it. Certainly is not easy. My last role at Patterson, I was actually working in special markets, where I was negotiating with some of the largest DSOs in the country, and then had an opportunity to move on to a new and emerging group based out of Scottsdale, where I was supporting the M&A and business development efforts. When I joined, we had about 25 locations, and when I left, we were closer to 85 locations. And so really rapid growth from an acquisition perspective, but had a great opportunity to see a variety of different practices, and also, you know, intimately understand, again, how buyers operate, how they think, how they’re looking at transactions and opportunities specifically. And then about two and a half years ago, I had the opportunity to come on board here at TUSK. My role is primarily educationally focused, where I work with doctors every day, to understand their business, understand their goals, the transition opportunity, help them understand if there’s improvements that they could make in their practice for an eventual exit, but also what’s going on in the DSO space. Give clarity, give guidance, again, educate so that they can make the most educated decision on, you know, monetizing their life’s work.

Connor Jorgensen

So, I think it’s important to first understand really, where the overall market is going in dentistry. So right here you see a graph that is showing the market cap size from 2024 at about $164 billion and it’s projected to be closer to $270 billion by the end of 2034. So that’s an overall market growth of about 4.5% compound annual growth rate. But when you look at the DSO market itself, it’s actually projected grow almost 18% annually, compound annual growth rate, year over year. So, when you look at 2034, the DSO space specifically is trending to be almost $200 billion where the dental market itself is $270 billion. So there is certainly rapid growth in the DSO market and the market size, where there’s a much more standard growth or smaller growth rate in the overall dental space itself. And really there’s a variety of factors that are driving this, and I think the first one being, is the practice ownership rate over time. So, this information came from the ADA, HPI information here in August, and you’re seeing significant downward trends of doctors that are having ownership in their practices. Now not to say that private practice ownership is a dying situation. You know, I always think that there is absolutely a great pathway forward and a great opportunity for doctors to be independent owners and entrepreneurs in their practice, but the data is showing pretty significant downward trends of ownership. So, starting out with doctors who are under 35, 20 years ago, almost 25% so a quarter of the market of those doctors were private practice owners, and you fast forward to today, less than 10% of doctors under 30 are actually owners in their practice, but then the biggest skewing number is the doctors who are between 30-34 years old. So, 20 years ago, about half of that age group and that demographic were private practice owners, and in today’s market, only 32% of those doctors are private practice owners. So, we’re seeing a significant trend downward on private practice ownership over time again. Still think that there’s a healthy market for private practice ownership, but you’re seeing a variety of different reasons as to why some of these doctors, either A) are not pursuing to acquire a practice, or B) maybe it’s delaying their acquisition into later into their career.

Connor Jorgensen

So, one of the first factors of really the delay or prevention of private practice ownership is the expensive dental school. You know, at the end of the day, when you look at the last eight years or so, a resident and non-resident tuition is growing rapidly, where a non-resident expense for tuition annually has increased 26.5%, and for residents, it’s grown 18%. So as you see, as tuition continues to rise and student debt continues to rise, some of these doctors are less likely to become private practice owners because they have hundreds of thousands of debt coming out of dental school. Then, not to mention having to take another loan for $1M or $1.5M to come and acquire a practice as well, it just becomes really challenging situation financially for some of these doctors to pursue private practice acquisition.

Connor Jorgensen

Then the next aspect is the demographic of doctors that are coming out of dental school and in the workforce today. So, in 2024 we saw the first time that female dentists were the majority of graduating dentists out of dental school. But that obviously is growing in a trend in the actual workforce itself, where in today’s market, almost 40% of the dentists are female and a little over 60% are male dentists. Which, when you look at statistics, female dentists typically are not ones that are pursuing private practice ownership as well. Again, I still think that there’s certainly opportunity to improve those numbers, but just statistics speaking. They typically are not ones to pursue private practice ownership, which again, is skewing those numbers downward in ownership and acquisition.

Connor Jorgensen

Moving forward, then I think one of the biggest trends that we have seen is the actual income of dentists in today’s market. So, this graph from the ADA shows a doctor, a GP’s income from 2010 all the way to 2024 and it has slowly been declining over time. You know, when you look at from, you know, COVID through today, you’re seeing this rapid downward from about averaging $250,000 in income to just north of $207,000 annually. You know, we consider this the fiscal squeeze, you could call it, because in today’s market, you know, you are spending more time working in your business and working on your business from an administrative standpoint, but also the cost of doing business has increased as well, so you are seeing more and more expenses in your practice continue to rise, but you’re also seeing payer rates either plateauing, staying, you know, stagnant, or maybe declining or maybe increasing slightly, but you as the dentist and the owner in the practice are the one that’s really being squeezed in the financial burden of owning and operating the practice, which can be a very challenging situation, obviously for you, as you know, you used to be making significantly more, but you feel like you’re working even harder in your business, but you’re making less. And you know, there’s a statistic that came out from the ADA that doctors have doubled the time that they are working on their business. So, when I say on your business, I’m talking about administrative aspects. You know, whether it’s marketing, recruiting, payroll, you know, you name it, any of the non-clinical aspects going on in the practice.

Connor Jorgensen

Since 2010 doctors have actually doubled their hours working non clinically, which again, makes you feel like you’re working harder than ever, and unfortunately, feeling like you’re making less money than you have in the past, which the numbers are showing next is the practice modality. So, this has really changed over time on how doctors are actually practicing within the offices and within the the practices themselves. So in today’s market, 2/3 of dentists are actually working in some type of group setting. And when I say group setting, I’m talking about, you know, single location with multiple doctors or multiple locations. But we’re really seeing a trend and an upwards trend, of doctors wanting to work in a collaborative environment with more doctors, more locations where only 34% of doctors today are solo practitioners, and I’ll get some more information on the age demographic of those doctors. But there’s a significant trend of doctors wanting, again, to work in a more collaborative environment with peers, multiple doctors. And in today’s market, you know about 17% of doctors are affiliated with private equity backed DSOs, but 28% so almost 30% of the market of dentists are actually in some form of multi-site group practice. So, this could be five locations, it could be 50 locations, but that, again, is really trending upward because of what doctors are looking for in a working environment. But when you take the practice modality, and then you dive in a little deeper to the actual age of the doctors that are practicing, it is kind of a sobering reminder of what’s going on in today’s market and how doctors, again, are practicing, and what demographic is where.

Connor Jorgensen

So, when you look at the late-stage doctors, at the top of this graph, the 26+ years in practice, almost 50% of those doctors are in a solo practice, and they’re the only dentist in that practice. But when you look at the mid stage career, the 11-25, or the early stage career, the up to 10 years doctors, they are heavily trending towards the DSO avenue, where it’s multiple locations, you know, 100+ locations, or 50 locations, you name it. But we are seeing, again, trends where these doctors are staying in the DSO environment because, as I talked about before, they have significant amount of debt. They want to have a steady income. They want to have a work life balance. They want to have the ability to have some freedom and flexibility. And these DSOs provide that to them. But as they continue to work in that environment, the DSOs provide a more lucrative opportunity, or have some more hooks involved, where there might be a 401K, or some equity involved. So, these groups are able to recruit and retain dentists much longer than they were in the past, where these doctors originally were trying to go for a couple years, get up their speed and then go out and acquire practice, we’re not seeing that trend as much. And again, I think that that’s where it’s an important piece, where, historically, these doctors that were, you know, let’s call it anywhere from 5-25 years that are currently in a group setting.

Connor Jorgensen

We’re typically exiting to acquire these single location, single doctor practices. But that’s not happening at the same clip as it is, as it was previously, which, again, is putting some of these doctors in the late stage, in a bind, because they don’t have an avenue to sell, right? Originally, they might have thought, well, yeah, I’d love to bring on an associate and transition the business to him or her at some point, but they’re not able to get associates, or they’re not able to find a private doctor to sell the business to, which, again, is driving more consolidation from the DSO front, because these doctors, again, don’t have someone to sell to in many cases.

Connor Jorgensen

Then lastly, we want to look at the economics of an acquisition. So, when you compare a private practice transaction and a DSO or a financial investor transaction, they are weighed on two very different financial means of an acquisition. So when you’re looking at a private practice transaction, typically speaking, you’re looking at a percentage of collections, you know, and I would say, back of the napkin math, anywhere from 65-85% of collections, again, depending if it’s GP, depending on if it’s a specialty practice, depending on geography, overhead, you name it. But in this example, I have a practice doing $2 million and you know, all of the expense categories are fairly similar in industry benchmarking. So, the adjusted net income or the EBITDA is a 20% margin. So, the free cash flow after all expenses are paid, and after the doctor is paid his or her fair market wage, the total profit of this business is $400,000. So, if you were looking at, you know, a private practice transaction, that sale price would be anywhere from $1.3-$1.7 million if you were comparing a 65-85% of collections. Now, on the flip side, if you take that same practice and you take a multiple of EBITDA versus a percentage of collections valuation is drastically different, you know. So if we’re looking at a between a 6-7x of EBITDA. This sale price for the doctor could be anywhere from $2.4 to $2.8 million so when you’re comparing not only the economics, but who can buy the practice and if this practice sale needs to be the opportunity for the doctor to really reach financial independence, many doctors are pursuing, again, a DSO sale, because it is so much more financially appealing and is able to support them into retirement, versus a private practice sale.

Connor Jorgensen

So again, a lot of different variations to compare when you’re considering what transaction is occurring, but this is certainly one of the drivers in today’s market that is driving DSO consolidation versus private practice transactions. So really, to, I’d say, put a bow on some of the statistics from the ADA HPI information. You know, first early-stage dentist priorities are shifting pretty dramatically compared to the last generation of dentists priorities. They again are focused on a work life balance. They want to have mentorship. They want to have a community of doctors to work with. But again, as I said, they want to have financial security and a steady income. They don’t necessarily want or need to make the most money possible, but they want to have a steady income that is providing them security, because, again, of a significant debt that they have in that dental school debt and other things in their life.

Connor Jorgensen

Then lastly, they also want to mitigate risk. You know, many of you on this call bet on yourself. And you know, we’re entrepreneurs, and you took the leap to open up a practice, or to acquire a practice and be your own boss and be an entrepreneur. And in today’s new generation of dentists, not to say that all of them are not entrepreneurs, there are still a variety of very entrepreneurial spirited dentists, but many of them want to mitigate their risk, and they want to come in, do dentistry, focus on the clinical aspect, and go home and have again, a work life balance that is mitigating their risk at the end of the day. So not to say again that these doctors are never going to be practice owners, I want to be abundantly clear on that there again, is still a great opportunity in the market for doctors to have a great living, a great outcome and a great income in being a private practice owner. But however, what we’re seeing in the marketplace, and these statistics are showing us that if these doctors are pursuing a private practice acquisition, it is being farther delayed than historically speaking. So that’s where doctors on the call today that might have three, four or five years left in your career, you really want to start preparing on what your next move is, and ensure you decide what path you want to take to make sure you can actually transition and sell your practice in a meaningful way.

Connor Jorgensen

So, just to reiterate again, some of the factors in the market that are impacting private practice. Transactions, again, rising debt for students and new grads coming in, the demographic of new doctors that are entering the workforce, historically speaking, is preventing or showing signs of limited interest in acquisition. The income, again, is a big piece for a dentist that you know if you’re taking on the burden, the debt, the risk, but your income is lower and trending lower. That’s not a very attractive position to be in. The time and allocation that you’re putting on in growing your practice and working on your practice again, is impacting what that looks like, and then the modality of how doctors are practicing today, and lastly, that valuation. So all of these things are just compounding factors together that we’re seeing the rise of DSOs in the acquisitions because they’re seeing doctors that are burnt out, frustrated, that care about dentistry, care about their patients, care about their team, but are just, I would say, tired and frustrated about owning and operating their practice and looking for, you know, support from an administrative standpoint itself.

Connor Jorgensen

So, as Ryan had alluded to, you know, we are going to be seeing and expecting a significant rise in DSO activity. We’ve already seen it in Q4 but into 2026, as well. And it’s important for you on this call to understand how you can protect yourself, but also how you can position yourself for success. You know, we obviously want to be the resource of education and support you in your transaction, but we want to make sure that you know what, maybe tips or tricks are going on behind the scenes with some of these buyers. So, I wanted to provide really the top three scenarios of what buyers are looking for, maybe how they’re able to leverage or manipulate offers or deal terms in their favor versus your favor, and how to again, protect yourself at the end of the day.

Connor Jorgensen

So quick disclaimer, as I said earlier, I used to be a buyer. All buyers are not created equal. Let’s put it that way. There are some incredibly great buyers out there and great DSOs, and then there’s some that maybe try to take advantage of some situations. So, I just wanted to kind of put this disclaimer out there that at the end of the day, all DSOs are not created equal. There are well over 150 private equity backed DSO in DSOs in today’s market. And when I say DSO, I’m talking DSO, DPO, OSO, SDPO, whatever acronym you want to use. There are so many out there with all different support structures, equity positions, mechanisms to support their doctors and teams, ultimately. But I think it’s important to understand, again, how they’re looking at your business to maybe maximize their return versus maximizing your return.

Connor Jorgensen

So, I’d say first to kind of step back in the DSO space. Specifically, I like to look at the benefits of what opportunities and benefits are there in the DSO space. You know, as I said, there are so many different groups out there, but I look at it from an operational perspective as well as a financial opportunity too. So, from an operational side of things, you know, the first, and I’d say, sometimes most important for some of these doctors is it’s a work life balance. You know, you’re able to alleviate some of the stress, some of the burden of operating your practice, and you’re able to finally take some time off and not worry about the practice over the weekend or on your vacation or whatever else it may be. It provides you with that opportunity to again delineate from work and or, excuse me, personal settings, but these DSOs are going to be supporting you from every administrative perspective you can think of, HR, marketing, payroll, revenue, cycle management, procurement, legal, accounting, finance, you name it, everything that you can think of from an administrative standpoint, they want to support you. They are experts in the operations of dental practices, and they want to help you grow, not only top line efficiencies, but also they want to grow and develop your team, right? They want to support your team to be better, to spend more time with patients.

Connor Jorgensen

Maybe you have a rock star hygienist that you know wants to be a regional for a hygiene team, things like that, like they want to empower your team to do better, but also create that collaborative environment where you’re working with peers, from California to Florida to Minnesota, so you name it, where you can again collaborate, support each other, and be all on the same team, where a lot of doctors we talk to say that private practice ownership is lonely, and it kind of feels like you’re on an island. You know, it all stops with you. You’re the Chief HR Officer, you’re the Chief Clinical Officer. You’re the Chief Janitorial Officer, right? Like it all stops at you, which can be very stressful and very challenging. And then lastly, you know, these groups do not want to interfere with your clinical aspects and how you treat, and how you treat and plan and how you provide dentistry to your patients. That is the last thing that they want to do.

Connor Jorgensen

A group should never be dictating how you treat, who you treat, and again, you know production numbers, right? So, at the end of the day, operationally speaking, they’re there to support you to be more successful. But financially speaking, there is an incredible wealth creation opportunity available in a DSO setting. It allows you to, you know, sell either all or a portion of your practice, take some chips off the table, really mitigate your risk in a way, because so many doctors, their highest net asset is their dental practice, which is a highly illiquid asset. So, it allows you to, again, de-risk your position significantly, make a financial gain, which, again, the cash aspect is taxed at capital gains, which is a great spot to be too. But depending on the deal structure, you can actually retain some ownership. So, you might, you know, sell 60% of your practice, but then retain 40% so as the group is continuing to grow, not only top line, but bottom line, through economies of scale, you’re able to continue to grow your distributions and your take home compensation through their expertise from an operational perspective. But lastly, it allows you to secure your exit.

Connor Jorgensen

You know, a few minutes ago, I talked about the solo provider that you know might be concerned if they even have a path forward of selling their practice. Well, if you have a group that now has allowed you to secure your exit and guaranteed your sale of your business. This again, alleviates a lot of stress for many doctors, because again, they’re worried about, you know, how am I going to be able to sell my practice, or am I going to be able to take care of my family, or whatever it may be, and this, again, allows you to really secure your exit. So, I’m going to get into, I’d say the top three scenarios or situations that we’ve seen and that I’m familiar with, again, from the buy side of how groups often try to maybe take advantage of a situation in their favor, rather than in the doctor or the seller’s position.

Connor Jorgensen

So really, the first is the unsolicited offer. And this is probably the most common that we see here at TUSK, where we have doctors come to us all the time that says, you know, “Hey, I have this offer from this group. Is it a good deal? Can you tell me yes or no? Like, where might be some soft spots in it.” And groups will always try to prioritize unsolicited offer. You know, at the end of the day, they want to leverage information asymmetry, as Ryan had talked about earlier, and I really consider this, you bring in a knife to a gunfight. You know, these groups have sophisticated financial people behind the scenes MBAs that all they do is M&A transactions and financial transactions. So it is, you know, information asymmetry is the imbalance of information between one party and the other, and they’re trying to leverage that imbalance in their favor, even though it may sound like it’s a mutually beneficial relationship many times, it’s not, in an unsolicited offer scenario, so many doctors will be wined and dined by these groups. They’ll be complimented. They’ll be, you know, best friends with these buyers. You know, it’s a strategy for them to kind of get your guard down. They want to understand, and they want to learn maybe some holes in your business or some soft spots in the business that they can then leverage against you in a transaction. Obviously, they want to reduce competition, because that allows them to control the narrative, control the valuation, and really tell you what market norm is versus you seeing the broad aspect of what’s in the market. But then also, a lot of the deal terms may again appear on paper to be mutually beneficial, but it’s oftentimes one sided where it’s more risk on your plate and less risk on theirs, or more financially appealing for them than for you. And that’s again, where you need an expert like TUSK to really help you through this process, but then they can also kind of play games in the closing process, we’ve seen some groups that try to expedite a closing process because they know they got such a great deal that they don’t want the doctor to find out what’s going to or, like, understand maybe where there’s how they got taken advantage of, right?

Connor Jorgensen

Or we’ve seen times where a group will actually try to delay the closing process because they know that there’s going to be some drop in revenue in the business, so they can re-trade the deal, and then all of a sudden, you know, what was $5 million in value, might only be $4 million in value, but you’re, you know, again, emotionally, financially committed to this. And they can again, delay that process based on what they see behind the scenes. Then lastly, I would say my favorite is the you know, our offer won’t change. It’s kind of the oldest trick in the book, where, you know, it doesn’t matter if you bring other buyers or it doesn’t matter if you hire TUSK like our offer won’t change.

Connor Jorgensen

Well, I’d like to show a case study of a former client of TUSK that had that exact situation come up, where this group had a four locations, five doctors, $7 million in revenue. It was a specialty business, so really healthy margins within the practice itself. The unsolicited offer that they had received, the offer was based on a $3 million EBITDA business. They had received a 6.7x multiple cash at close was $6 million dollars, equity and earn out both $2 million, so total enterprise value, $20 million. $20 million on a $7 million revenue business looks like a spectacular opportunity on paper, but the doctor came to us and said, “Hey, I kind of am getting pushed around a little bit on the closing process. I feel like I’m missing something here, and I want to look to see what else is out there, and see what’s available to me.”

Connor Jorgensen

So, when TUSK ended up getting the financials, we end up finding another $300,000 in EBITDA. So now our go to market EBITDA was $3.3 million we’d reached out to 36 different groups. We had 12 NDAs executed for these groups to actually pursue and go through the process of a marketed sales process with TUSK. And while we had multiple IOIs and LOIs, we ended up having four final LOIs through the final process. And so, one of the offers that the group had received was for $25 million we had received a 7.6x, $21 million cash, $2.5 million in equity, total value coming in at $25 million. This offer came from the exact same buyer that originally offered the seller $20 million, three months earlier. So again, when we talk about our offer won’t change, it couldn’t be further from the truth. Now, we had other offers, right? We had another offer that came in at an 8.5x with a total enterprise value of $28 million which was a 40% improvement. So again, you need to be able to see all aspects of the market and really be able to drive a competitive process to ensure you’ve been able to maximize not only the value, but find the right cultural fit for you as well. You know at TUSK, we follow this very closely, and on average, we’re about 40-50% higher than an unsolicited offer when we do represent a client. So, for those that might have an offer in hand, I would certainly encourage you to have a conversation with us about what your opportunities may look like.

Connor Jorgensen

So, the next is the calculation of EBITDA. There are a variety of different ways that you can manipulate what the EBITDA calculation is. You know, one time, pro-forma expenses, personal expenses. You know, the group wants to try to depress the EBITDA as much as possible, so that, again, they’re not having to pay a premium for the business. Now, I always like to remind folks that EBITDA is, again, how the transaction is valued, but EBITDA is earnings before interest, taxes, depreciation and amortization. If you’re running your EBITDA calculation, you need to make sure you’re including your fair market wage as a providing clinician. So, whether you’re you know, a specialist, a GP, you name it, you need to make sure that your compensation is being included in your EBITDA analysis, so that, again, it’s a true EBITDA analysis or EBITDA calculation. So, what are some of the ways that that groups can actually look at your EBITDA and maybe manipulated in their favor? First, the time period, right? They may be looking at a full calendar year, you know a 12-month period, rather than a trailing 12-month period. So that’s where you want to make sure that you are looking at a full 12-month, trailing 12-month because, again, if the buyer is selective in how they’re selecting the timeline, that obviously can manipulate what your EBITDA calculation is. And then one-time expenses as recurring. You know, all of you have one-time expenses in your business where it’s, you know, new carpeting in the practice, maybe you had a flood, maybe you got new chairs, you name it, right. There are so many different one-time expenses in the business that absolutely need to be added back, but many times, groups will try to leverage that as a recurring expense, which absolutely could be further from the truth. And also, many times, they’ll include personal expenses. You know, many of you have personal items running through the business which you absolutely should be taking advantage of, but you know, family on payroll or a car, or you name it. Sometimes groups will include that in your expense category, which is going to go away in a transaction. So, you want to make sure that you again, are removing all personal expenses. But sometimes you may not understand or know what they’re removing from that expense category in their calculation of EBITDA, where, again, you want to have someone that’s a on your side or a sell-side advisor that is supporting you in that calculation.

Connor Jorgensen

Then pro forma adjustments. You know, there’s always ways to adjust EBITDA from a forward-looking perspective that is going to help improve your EBITDA, because again, of those economies of scale that the group is going to be able to take advantage of, which leads into the ambiguity of some expenses. There are some groups that will, you know, remove benefits, but then add another additional, you know, $20,000 of benefit expense on top of what you already have, because it’s “ part of the benefits package.” But you don’t really know what benefits are there. It’s just a way to, again, manipulate that EBITDA or decrease your EBITDA calculation, where you need to make sure that that you are crystal clear on what expenses are ongoing.

Connor Jorgensen

And then the last two are incredibly important, one being clinical wage. We have seen where sometimes a doctor’s clinical wage is artificially inflated so that the EBITDA is then deflated. So that’s where we want to make sure that you and your clinical wage is truly a fair market valuation of what that looks like. But there’s a variety of different ways that clinical wage can be manipulated in their favor and not in yours. And then lastly, management fees. Many joint venture groups in today’s market are charging management fees for, again, the services that they’re providing. But how do you negotiate those management fees in your favor? I mean, we’ve seen it anywhere from 5% to 10% of management fees, so obviously you want to have a negotiation of what those management fees are. We’ve actually seen some groups burden your business on a management fee before you even transition the business, which again, is artificially deflating your EBITDA, which can be drastically lower.

Connor Jorgensen

So again, you want to make sure that all of these pieces are really being taken care of in your favor. Then lastly, deal structure. You know, at the end of the day, deal structure is incredibly important in the transaction value for you, not only short term, but also long term, as the deal materializes and monetizes. You know, groups are trained to mitigate risk. They want to try to put as much risk on your plate and move the risk from their plate onto yours right but in a mutually beneficial relationship, that’s where you’re typically sharing in that risk. It’s sharing in the upside, sharing in the downside as well. So, you want to make sure that deal structures are mutually beneficial, but not just looking like it. It’s mutually beneficial on paper, but actually beneficial for everyone involved. So first, you know, from a deal structure perspective, if a group is running an unsolicited process with you, they will absolutely try to have a below market transaction multiple you know, as I shared, sometimes we’ll see transaction multiples ranging from 7-9x depending on where the group is, what the EBITDA is, you name it. But many groups will lead with the lowest multiple possible that is maybe attractive to you based on a private practice transaction. The next is the cash to equity allocation, where this is critically important too, where equity value is very, very important, and it will and it can make generational wealth for you and your family and based on the group that you’re joining. But you also want to make sure that you’re still bringing enough cash at home to satisfy your needs, clear debt, put some money in the bank, and again, hopefully be financially independent. So, when they can control the cash to equity allocation again, that can put you at a disadvantage. But then that equity position, as I said, is very important. When can you liquidate it at? What value do you get to liquidate it? How much do you get to liquidate? All of those pieces need to be understood on the front end before you sign a letter of intent or before you join the organization, so that you’re abundantly clear on how you’re actually going to fully monetize your business, not only again at the day of close, but when you eventually want to exit the business, then earn outs, true ups and hold backs. These are all deal terms that can be very easily manipulated in their favor versus in your favor. I mean, one example is sometimes groups will try to have an earn out based on EBITDA calculation, where you know you have no control of your EBITDA, so at the end of the day, if you know you’re going to get a bonus based on growth in EBITDA. But then they might apply a marketing expense, or they might apply a management fee, or whatever it may be that can really manipulate and deteriorate your value at the end of the day. So, you want to make sure that, again, you have experts that are negotiating on your behalf and then ongoing employment terms. You know that is a big piece of it for not only you, but your associates in the practice too, to ensure that you’re fully protected long term as well.

Connor Jorgensen

So, kind of pulling it all together here, you know, how can you protect yourself? And what can you do, whether you’re looking for a transaction in 2026 or maybe just trying to gain some information moving forward again, educate yourself on the market. You know, all of you are on this call for a reason. You want to learn. You want to understand what’s going on and educate yourself on what’s actually happening, not only from a broad perspective, but locally as well. It’s incredibly important to understand what’s happening in your local market, but also depend on which path is good for you. You know, as I said, there absolutely is always a successful path for private practice transactions, but the DSO transaction is continuing to grow and gain more steam and more momentum and be more attractive for many doctors so fully understand your path and what you want to accomplish in your transaction. You know, start exploring early. There’s so many times that we have doctors that come to us and say, I’m looking to sell and exit in 12 months or 18 months, and unfortunately, I have to tell them that there’s not really a great deal able to be had, because many of these groups want doctors to stay, you know, four to five years to maximize value in deal terms. So really want to start exploring your process early. You know, make sure that your business is ready. As I said, before I work with doctors every day and have to share like “Look, you’re high in this expense, or you could improve your business in X, Y and Z fashion to be more attractive at some point.” So more than happy to provide again, that guidance, but run a competitive process like you need to make sure you see every potential buyer but leverage these offers against each other to maximize your outcome fully and then engage with your trusted advisors, whether that’s TUSK, whether that’s your attorney, whether that’s your CPA, your financial advisor, make sure you have a team supporting you in your transaction, but you’re abundantly clear in stating on what your goals are and that they’re all aligned and supporting you to eventually accomplish those goals as well.

Connor Jorgensen

So, as I offered you know, I’ll leave this QR code up here for a minute, but we would love to connect with you, provide you some insight, some guidance in not only the broader DSO market itself, but also locally. You know, again, we have so much experience across the U.S. in every single state, and we would be more than happy to provide you with insight and guidance on what’s happening specifically in your state or within your practice, as well on how you can maximize what your opportunity and what your transaction looks like or what path meet makes most sense for you. So with that actually looks like we are a little over time. So I apologize there, but thank you all for joining us this evening. If there were questions that were submitted in the chat box, we will reach out to you within 24 hours. But sincerely appreciate the opportunity and thank you all for joining you.