Over the past several months, the dental industry has seen several notable shifts in the consolidation of consolidators, including:
- Guardian Dentistry Partners partnered with Select Dental Management
- Smile Doctors acquired myOrthos
- Heartland Dental partnered with Smile Design Dentistry
- dentalcorp expanded through its partnership with NorthStar
- Viridian Dental Partners joined forces with Innovate 32
As new partnerships continue to take shape, leaders of Emerging DSOs must consider: What key insights can we take from these transactions? What do these transactions reveal about how successful organizations are being built?
Every partnership announcement reflects years of decisions about leadership, operations, capital structures, doctor alignment, and growth strategy. These organizations weren’t simply assembled, but instead intentionally built to become attractive platforms for strategic mergers.
If your goal is to eventually recapitalize, partner with another platform, or create a successful exit, the decisions you make early on have significant impact on your potential outcome.
Organizations that proactively position themselves for growth are better equipped to capitalize on strategic opportunities and create lasting value for stakeholders. While every transaction is unique, these recent partnerships offer several important lessons for Emerging DSO leaders who are thinking about how to build, lead, and scale their organization with an eventual exit in mind.
Consolidation is Continuing, But Not Every Platform Will Win
Dental consolidation is far from over, but it is becoming increasingly selective.
A few years ago, many conversations centered around the number of locations. Today, buyers are evaluating something much more nuanced.
Guardian’s acquisition of Select Dental Management wasn’t simply about adding 38 supported practices. It expanded Guardian’s presence throughout the Northeast, while adding an experienced leadership team, established operational infrastructure, and a network of more than 130 providers.
Similarly, Smile Doctors’ acquisition of myOrthos added more than 70 orthodontic locations across 13 states while strengthening density in existing markets and creating entry into several new ones.
These transactions demonstrate that strategic fit often outweighs pure size.
“Acquiring practices creates scale, but operating them successfully creates value,” Brian Christensen, Chief Development Officer of 7 Pillars said. “Sophisticated buyers increasingly focus on unit level economics, assessing indicators like same-store sales growth, provider retention, recruiting success, patient experience, and operational consistency.”
As the industry matures, the gap between good platforms and great will continue to widen. The question to consider is whether your organization will become a buyer, a desirable partner, or a platform that struggles to differentiate itself.
Not Every DSO Is Built for Private Equity
One of the biggest misconceptions among Emerging DSO leaders is assuming private equity will ultimately be their buyer. The reality is that most Emerging DSOs will partner with or be acquired by another DSO rather than directly by a private equity firm.
Private equity generally invests in businesses that have already reached meaningful scale, possess sophisticated infrastructure, and offer a different type of value. If your long-term vision is to attract institutional capital directly, your organization must look different from the average Emerging DSO. Understanding this distinction should influence how you build your company today.
To position your organization for long-term success, there are several strategic priorities every Emerging DSO leader should consider as they continue to grow.
Strategic Focus #1: Build a Model That Fits Your Future Buyer
One of the most apparent lessons from recent transactions in the DSO space is that strategic fit extends far beyond geography and financial performance. Buyers are increasingly looking for organizations whose operating philosophies closely mirror their own.
The partnership between Guardian Dentistry Partners and Select Dental Management is a strong example. Both organizations operate under a joint venture model that gives dentists meaningful equity participation, utilize Clinical Advisory Boards to help preserve clinical autonomy, and emphasize long-term practice success through structured operational systems.
Guardian CEO, Danny Kawas, described the two organizations as sharing a “common religion” when it came to their partnership philosophy, a reflection that the transaction was driven as much by cultural and operational alignment as financial metrics.
If you’re building a joint venture organization, your most natural strategic partner is often another platform that already understands and values doctor equity, decentralized leadership, and long-term doctor alignment. Likewise, organizations built around a centralized holdco model are generally more attractive to buyers who operate in a similar way.
Your operating model, governance structure, and philosophy toward partner doctors all influence who is most likely to see strategic value in your business. The closer your organization aligns with your ideal buyer, the more compelling your platform becomes, and the smoother integration is likely to be.
In other words, your exit strategy isn’t something you decide at the end. It’s something you begin building every day through the decisions you make about culture, leadership, and how your organization operates.
Strategic Focus #2: Grow With Leverage in Mind
Capital structure often gets overlooked during periods of rapid growth. While debt can help accelerate acquisitions, excessive debt can become a significant obstacle when pursuing a recapitalization or strategic partnership.
“One of the biggest mistakes we see are leaders optimizing for the next acquisition instead of the next chapter,” Brian said. “Growth fueled by too much debt can limit your options when the right strategic opportunity comes along.”
Organizations carrying excessive leverage often limit future strategic flexibility and become less attractive to prospective partners. Maintaining disciplined leverage positions your organization for stronger long-term equity creation.
Strategic Focus #3: Build an Aligned Organization
Many business founders assume they’ll continue leading the organization after a transaction, but that’s not always the case. While some strategic partnerships retain existing leadership, others do not have the need to add another executive team.
That is why buyers evaluate more than leadership and focus on organizational alignment.
As your platform grows, consistency becomes increasingly important. Standardized doctor agreements, uniform legal documentation, clear governance, and aligned incentive structures help create a business that’s scalable and easier to integrate.
Just as important is physician alignment. If your doctors aren’t on board with the organization’s long-term vision, it can create friction during a transaction and uncertainty for a prospective buyer.
“Doctors need to understand what they’re signing up for and share the organization’s long-term vision,” Brett Pierce, Founding Partner of 7 Pillars said. “If expectations aren’t aligned, those issues tend to surface when it matters most. Alignment isn’t just important for growth, but essential for building a platform that is positioned for future success.”
Ultimately, buyers are looking for organizations that can thrive beyond any one individual. Companies with aligned leadership ensure confidence that the business will continue creating value long after the transaction closes.
The Bottom Line
The recent partnerships involving Guardian Dentistry Partners, Smile Doctors, Heartland Dental, dentalcorp, and Viridian Dental Partners demonstrate that the next phase of dental consolidation is centered on platform quality rather than platform quantity.
For founders and executives leading Emerging DSOs, the question is becoming less about “When should we pursue a transaction?” and more about “Are we building the type of organization sophisticated partners would want to invest in?”
The organizations creating the greatest long-term value are building businesses with intentionality.
Whether you’re actively evaluating opportunities or simply want to ensure you’re building your organization for the strongest future outcome, our team of advisors can help. We work with healthcare leaders to assess valuations, deal structures, and equity options, providing the strategic guidance needed to make confident, informed decisions every step of the way.
Start a conversation with one of our advisors today.
For further education, check out our blog post, Building, Scaling, and Transitioning an Emerging DSO, and subscribe to our podcast, The Advisor’s Table.