Dental sector exits have been tough for private equity
Recent PitchBook analysis shows that healthcare-focused private equity managers are struggling to exit their dental investments. As of Q1 2024, 37 PE-backed dental platforms in the U.S. and Canada have been in managers’ portfolios for more than five years, and 17 for more than seven years. PitchBook says longer holding times are a problem for managers who are already battling to retain partner- and junior-level physicians following changes in compensation structure after a deal. “The dynamic with physician practice management deals is, when physicians sell to a PE manager, there is a transition of economic models where they go from owners to employees, and now there is a need to incentivize them to stay,” explains PitchBook lead healthcare analyst Rebecca Springer, adding “For practice owners, when they first sell to PE, there is a big payout up front, but the trade-off is after that they are salaried and making less annually than they did as owners, at least at first.”
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