If history has taught us anything, it’s that healthcare consolidation moves in cycles. We’ve seen it before—first with hospitals, then with urgent care, ophthalmology, and other specialties. The dental industry is no exception. The first wave of heavy M&A activity has already reshaped the landscape, with early adopting sellers capitalizing on high valuations and favorable deal structures. Now, we’re on the cusp of the second wave, and those who are prepared will have the most to gain.

The Healthcare M&A Cycle: A Playbook for Dental Consolidation

Healthcare M&A follows a predictable pattern:

1. Early Consolidation: The first wave begins with a fragmented industry, attracting private equity-backed groups that identify opportunities for efficiency, scale, and profitability.
2. Growth & Expansion: The strongest platforms grow aggressively, acquiring practices and optimizing operations to maximize EBITDA.
3. Recapitalization & Maturity: Large groups begin their recapitalization process, selling stakes to larger investors or merging with competitors. This leads to an eventual slowdown—until the next wave reignites the cycle.

We’ve seen this pattern play out in medical specialties like ambulatory centers and ophthalmology, where early sellers saw higher valuations, while late-stage sellers faced a crowded market with stricter deal terms. Dental is now following that same trajectory. So,  what’s coming next?

The Market Is Poised for a Second Wave in 2025

The M&A market is directly influenced by three key financial factors:

• Interest rates – The Federal Reserve’s aggressive rate hikes in 2022-2023 slowed transaction volumes, making debt more expensive and limiting deal flow.
• Economic outlook – Uncertainty in the market has slowed down the decision-making process of DSOs/PEGs in recent years.
• Operating environment – Both sellers and existing DSOs have experienced a difficult operating environment and have seen EBITDA/profit margins shrink. This has led to a slow down of sellers and DSOs going market in recent years.

Now, the outlook is shifting. Economic stabilization is expected in the second half of 2025, and as interest rates normalize, capital will begin flowing back into the market. This will put DSOs in a stronger position to deploy capital aggressively once again.

The Recapitalization Effect

A critical factor driving the second wave of dental M&A is the recapitalization cycle.  Pitchbook noted that there are over 37 PE-backed DSOs that are 5 or more years into their recap cycle.  We have already seen two meaningful recaps in 2025 as well as a large merger. As recaps happen, those DSOs secure new capital partners; they will be under pressure to grow their platforms rapidly—creating a prime opportunity for practice owners looking to sell.

For dentists considering a transition, this means one thing: you need to start preparing now.

The Key to Maximizing Valuation: Preparation

Timing the market is only one piece of the puzzle when selling your dental practice. The real key to securing the best deal is preparation. The best-positioned sellers are those who have already put in the work—cleaning up financials, optimizing operations, and working with experienced advisors who understand how to present your practice in the best possible light.

If you wait until 2025 to start preparing, you’ll already be behind.  Things you can do NOW to prepare:

• Clean & Timely Accounting – Having clean P&Ls provided on a monthly basis will allow you to actively manage your profit, as well as help you through a sales/closing process.
• Real Estate – If you rent, have attractive long-term leases in place. If you own, then ensure your practice is not cross-collateralized with your real estate and have a good lease in place.
• Work With Your Advisors Early – Have strategic planning conversations with your sell-side advisor, your financial advisors, your spouse, and anyone else you feel will help you mentally prepare for the next phase of your professional career.

The next wave of dental M&A is coming. Dental practice owners who are prepared will have the opportunity to capitalize on rising valuations and increased buyer competition. But waiting until the market heats up could mean missing out on the best deals.

The smartest dental practice owners aren’t waiting for the perfect moment—they’re preparing for it. If you want to position yourself for success in 2025, the time to start is today.