AI, Robotics, and the Future of Dental M&A

Kevin Cumbus, President & Founder of TUSK Practice Sales, joined Ken Kaufman and Dallin Kaufman, co-founders of AccruDent, on The Dental Truth Project to talk about where dental M&A stands today and where it is headed. Over the last decade, TUSK has advised hundreds of healthcare practice owners partnering with DSOs, MSOs, and private equity groups, completing more than $1.5B in transactions. That front-row view of the market shaped Kevin’s candid take on why valuations have reset, why deal structure matters more than the headline multiple, and what robotics and AI could mean for the long-term value of a dental practice.

5 Key Takeaways For Dental Practice Owners

1. Practices and groups below $10 million of EBITDA are still attracting strong buyer interest. Kevin shares that practices and groups below $10 million of EBITDA are still selling efficiently, while deals above $25 million have struggled to get done.
2. Reset your valuation expectations to today’s market. The days of 10x to 11x multiples with 70% cash at close that groups with $2 million of EBITDA once saw are likely gone, and new capital is looking at 6x to 7x on $3 million to $5 million of EBITDA.
3. Judge an offer by what you take home, not the headline multiple. What matters is how the dollars arrive and how much risk you keep after the sale.
4. Expect the market to move fast when capital returns. Kevin expects 6 to 12 months of relatively stable M&A, then a three-to-five-year wave of rapid consolidation.
5. Robotics and AI could change what a dental practice is worth in the long term. Kevin believes robotic hygiene could one day make cleanings faster and cheaper, and that this could significantly impact the value of dental practices. If you’re banking on your practice being worth 9x or 10x 10 to 15 years from now, think long and hard about where the market is going.

Picture yourself walking into a kiosk at Target, opening your mouth, and walking out 20 minutes later with a perfect cleaning that cost about $15. A robotic arm does the work, measures pocket depths the same way every time, and plays your favorite song while it’s at it. That’s the future Kevin describes on this episode. No one knows when it will arrive, but it’s one reason he believes owners should think carefully about the future of dentistry. Here’s a closer look at the five takeaways from the conversation.

1. Smaller Deals Are Still Getting Done

At the top of the market, Kevin points to a rise in failed transactions above $25 million of EBITDA, where deals have been really hard to get done. Additionally, higher interest rates have pushed lenders to take a hard look at the DSOs on their books, and lenders found that some of them had deeper problems that weren’t visible on the surface, including real operational challenges. Some DSOs are now in bankruptcy, receivership, or financial distress, and their lenders are now looking for a way out of the groups they once thought would be easy to sell.

Below $10 million of EBITDA, it’s a different story. Kevin says that part of the market has stayed remarkably efficient, and TUSK has continued to run competitive processes for the groups below $20 million it represents.

2. Valuations Have Reset

Many owners still remember groups with $2 million of EBITDA getting 10x or 11x, with 70% cash at close. “Those days are gone and might be gone forever,” Kevin shared. Today, new capital entering the DSO space wants to buy in at 6x to 7x on $3 million to $5 million of EBITDA. For these buyers, the math still works: if a platform can expect to settle around 9x to 10x at $20 million of EBITDA, paying 6x for a $3 million group and growing it is worth getting excited about.

He encourages owners not to focus on the gap between today’s offers and what they could have gotten three years ago.

3. Structure Decides What You Take Home

“If you want a 20x deal, I’ll give you a 20x deal, but you have to let me structure it,” Kevin said. In other words, a headline multiple on its own doesn’t tell you much. The multiple is fun to talk about, but where the rubber meets the road is how you receive the dollars and how much risk you keep after the sale.

That’s where deal structure comes in. Two offers with the same multiple can look very different once you see how much is paid in cash at close and how much depends on rollover equity, an earnout, or the group’s future performance. Kevin noted that valuations and structures look different today than they did a few years ago, but owners who want liquidity and a chance to de-risk their balance sheet can still do so.

4. The Market Could Move Fast When Capital Returns

Kevin expects 6 to 12 months of relatively stable M&A, then a three-to-five-year wave of rapid consolidation. After ChatGPT launched in 2022, investors poured money into AI and the hardware behind it. Now private equity is turning toward businesses that rely on skilled hands, like HVAC and electrical services, and coming back around to dentistry as both a relationship business and a hands business. Kevin is already hearing from new pools of capital that want into the space.

Sellers aren’t going away either. Many dentists are in their 60s, fewer young graduates want to own a practice, and hygienists have become harder and more expensive to hire. When buyers return, Kevin expects it to be “fast and furious,” and private equity will value groups that can show they buy and integrate practices well.

5. Robotics Could Change What a Practice Is Worth

Back to the kiosk. Kevin acknowledged that regulation could slow it down and providers will likely push back. But patients want convenience and lower costs, and insurers will follow the outcomes data. One dentist overseeing 30 robotic hygiene bays would change the economics of the industry, and could improve access to care in rural areas.

“If you own a dental practice today and you’re banking on the value of that practice being worth 9 or 10x 10 to 15 years from now, I would encourage you to reflect on what we’re talking about here and think long and hard about where the market is going,” Kevin said. In the meantime, his advice is to dive into AI rather than dip a toe in. At TUSK, it has freed the team to spend more time on harder, more interesting work.

Know Where Your Practice Stands

TUSK Practice Sales offers a complimentary TUSKVal analysis for practice owners who want an honest picture of where their business stands and what the path forward looks like, with no obligation. To schedule a conversation with our team, reach out at [email protected] or visit www.TuskPracticeSales.com.