If you’re a private equity (PE) firm looking to invest in the healthcare industry, buying a dental practice for sale could be the perfect way to break into that subsector. But you’re probably wondering:
- How to find a dental practice to buy
- What goes into proprietary deal sourcing
- How to determine the proper dental practice valuation
Private equity firms buying dental practices should consider a few things. In this article, we explore deal sourcing private equity strategies and tools you need to buy a dental practice.
But first, let’s look at the growth of PE firms investing in healthcare organizations and medical practices. Then, we’ll dive into techniques for sourcing the best deal on a dental practice for sale by the owner.
The Rise in Private Equity Firms Buying Dental Practices
The number of private equity firms investing in healthcare organizations and medical practices has grown in the last few years. Reports reveal that in 2020 alone, healthcare deal volume increased by 21% despite a 14% decline in total global private equity activity and a 17% drop in total disclosed deal value.
Despite how much the pandemic changed the landscape for many industries, healthcare services are still a sector of interest to PE firms. What does that mean? PE firms still see significant value and future growth potential in these spaces.
Dental transactions picked up in 2020 and 2021, leading to a highly competitive market. The dental subsector is fragmented, offering numerous opportunities for healthcare investors to pursue add-on and platform transactions.
PE firms may buy a dental practice to help it scale and achieve a variety of synergies, including back-office and billing efficiency, improved marketing strategies to drive utilization, and greater purchasing power with key suppliers. No matter what, PE firms usually want to improve the practice in some way to make it more profitable.
Next, let’s look at how to find a dental practice to buy.
How to Find a Dental Practice to Buy
So, how can you get into this lucrative market? First, let’s look at proprietary deal sourcing and how it can help you find the best dental practice for sale by owner, broker, or larger healthcare organization. Here are several deal sourcing private equity strategies you can employ if you want to buy a dental practice:
- Use a dental practice broker. A dental broker is a professional who matches buyers and sellers of dental practices. This deal sourcing strategy is helpful if you don’t have the time or resources to conduct your own search.
- Use a dental practice valuation service. A dental practice valuation service can help you determine the value of a business before you make an offer. This option is great if you’re unsure how much the company is worth.
- Use a dental practice listing service. A dental practice listing service is a website that lists practices for sale by the owner or broker. This option is helpful if you want to see all of the practices on the market.
- Use a deal sourcing tool. While there are many database services available, a tool that leverages AI and machine learning to help you source deals is the most efficient way to uncover new opportunities.
Improve Your Proprietary Deal Sourcing With udu
Now that you understand how to find a dental practice to buy, you’re probably eager to start searching for a “dental clinic for sale near me” or “dental practice for sale by owner.” When you can easily find proprietary opportunities, evaluate the target’s growth potential, and determine its value, you will be much more confident in your investment decisions.
That’s why PE firms are beginning to turn to udu—an AI deal sourcing platform that combines the power of advanced technology with machine learning. Due to the flexibility of udu’s software, our clients across various industries build and track large datasets and automate
When searching for companies in fragmented industries such as healthcare, udu is equipped to find the ones overlooked by the human eye. Once you define your search criteria, udu:
- Combs through thousands of data sources to find potential acquisition targets and other relevant information
- Structures results and then iterate based on your feedback to improve the algorithm
- Scores and ranks the results using your preferences
Request a demo of udu to learn how we can help you find the best dental practice for your portfolio.