If you are a dentist who attributes 20% or more of your revenue to implants and over $1.5M in total revenue, you have one of the most valuable practices in America today. This was not the case a year ago, Dental Economics reports.
Twenty years ago, when consolidation of the dental industry was in its infancy, almost all investors were focused on buying general practices. They were plentiful, in great locations, and each year many new dentists graduated from school to join these practices as associates. Additionally, GP practices had recurring revenue through their hygiene department. Hygiene regularly represented 20%+ of revenue. It helped de-risk the cashflows and the dependency on the dentist. The combination of a recurring revenue aspect and de-risked cash flows (the less risky the cash flows, the more valuable a business) proved to be highly attractive for investors, leading them to begin buying GP dental practices. Soon, the buyers were everywhere. Many great businesses had already sold and it became harder to get a return on investment due to rising valuations. Read more.
