Dental M&A market 'firing on all cylinders'
The dental market for acquisitions, disposals and exits has been ‘firing on all cylinders’ over the past 12 months, with 2026 and 2027 set to be a pivotal time for many UK groups.
This is according to Phil Kolodynski of Dental Elite, who was among the speakers at the first Dentist Times Owners Club event of the year, held yesterday in St Albans, Hertfordshire.
He said new funding streams and the growth of micro consolidators are fuelling an increase in activity, backed up by better lending terms being offered by banks.
He added: “The market over the last 12 months has been firing on all cylinders and the main thing driving this activity is funding and the ability to get funding.
“We are seeing the most-competitive time in the lending market in the last 10 years, with multiple banks coming back into the sector.
“In the past many banks did not want to offer finance after a group had bought their second or third practice. They wanted two or three years data on the strength of the group, but that has changed and a number of banks are looking at just 12 months of management data before they will lend.
“Add to that the fact that interest rates 18 months ago were 2.3-2.7% above base. We are now seeing deals around 2%, so it makes acquisitions more attractive.
The market over the last 12 months has been firing on all cylinders and the main thing driving this activity is funding and the ability to get funding
“Where cash is available transactions can go through in three to four months, so with such a gamechanger in funding, anyone looking to do business, 2027 is probably the time to act.
“Bank policies can change very quickly, so make the most of it while we have these favourable interest rates and terms.”
He said the reintroduction of capital repayment holidays and more banks offering rolling credit facilities was further evidence of the strength of the market.
“This allows a lot of independents and mini groups to be aggressive in terms of their business growth,” he added.
“Competition drives any market and in dentistry currently it is coming from individual micro consolidators. We are still waiting for Tier 1 buyers to come back to the market as they have taken time out to get their houses in order and to look at their EBITDA.
“The key thing any group needs is to identify where they can improve internal operations. It’s about what the business looks like operationally, not just profitably. It’s not all about EBITDA like it used to be.”
He revealed that 31% of sales have been to micro consolidators, while 69% have been to independents, with the latter group quickly expanding to buy additional practices.
Kolodynski said: “The deal structure has changed, with fewer going to Tier 1 groups. Instead, we are seeing significant deals to mini groups with five to 20 practices, with bigger corporations focusing on larger sites.”
And the amount practices are being sold for has increased, from an average of £890,000 in 2017 to £1.4m in 2026.
Where cash is available transactions can go through in three to four months, so with such a gamechanger in funding, anyone looking to do business, 2027 is probably the time to act
“The market has strengthened and multiples are increasing, making exits attractive,” Kolodynski said.
“To maximise sale value, make sure you have management accounts for at least three months and that the data is live coming up to sale.”
And he advises owners to consider divestment when selling groups.
“If you have five properties and two have a much lower revenue, for example, it might be worth selling those separately as they will attract a different type of buyer and for a higher price.
“Divestment in really key and very under looked by a lot of group owners.”
The next Dentist Times Owners Club event will be held at The Belfry in Sutton Coldfield on 17 September. For information, click here.