By executive editor Andy Sloan, in association with Agilio Dental
The brokers are telling me the market is back. Deal flow is up, the DSOs are buying again, and the tone has shifted from caution to competition. I have seen this moment before. It is the most dangerous point in the cycle.
When pace returns, discipline is the first thing to go. Diligence gets compressed, integration gets under-resourced, and the deals that were too marginal eighteen months ago suddenly look acceptable because there is pressure to deploy. The groups that emerged stronger from the last correction did so because they used the slowdown to fix what they were doing wrong when capital was cheap. The risk now is that they forget what they learned the moment competition returns.
After 120 acquisitions, I have come to the same conclusion every cycle. The single biggest determinant of whether a deal creates or destroys value is not price, not multiple, not even the asset itself. It is whether governance was treated as a first-order question in diligence, or as something to bolt on afterwards.
Most acquirers treat governance as a post-completion exercise. It is the thing the operations team sorts out once the deal is closed. This is the wrong order. Governance is what determines whether integration is easy or impossible. If you cannot see, before completion, how this practice will be governed inside your group, how decisions will flow, who is accountable for what, how the principal’s role changes, and how clinical and commercial authority will sit together, then you do not have an integration plan. You have a hope.
The vendor is selling something other than the practice
Every acquisition is, at some level, a personal transaction. The dentist selling after 20 years is not just selling a business. They are selling the thing they built, the relationships, the team, a version of their professional identity. Acquirers who understand this close better deals and retain more goodwill post-completion. Those who treat it as a pure financial transaction tend to find that goodwill evaporates at precisely the moment it matters most, in the first six months after handover. Governance frameworks that respect what the vendor built are the ones that survive contact with the team they inherit.
Diligence finds the wrong risks
Financial diligence is good at finding the things that are already wrong. It is poor at identifying the things that are about to go wrong. Associate dependency, patient mix vulnerability, lease risk, NHS contract fragility. These are the issues that destroy value in the twelve months after completion, and they are rarely captured adequately in a standard process because they require operational knowledge of how dental practices actually work. They are also, almost without exception, governance failures dressed up as commercial risks. A practice over-reliant on one associate is a governance gap. A patient base concentrated in one demographic is a governance gap. If your adviser cannot see the governance issue beneath the commercial number, they will price the wrong risk.
Integration is where acquisitions succeed or fail
The deal is not done at exchange. It is done six months later, when the principal is still there, the team has not walked out, and the patients have not followed them to the practice down the road. Acquisitions that looked marginal on paper can perform exceptionally well when integration is handled with care. Acquisitions that looked exceptional on paper can destroy value within a year because no one had a credible plan for the day after completion. The pattern is always the same. The groups that integrate well are the ones that built governance into diligence. The groups that struggle are the ones that treated governance as an afterthought.
A practice with strong clinical culture and a loyal associate base will outperform one with better headline numbers and a fragile team almost every time
Culture is not a soft issue
In dental, culture is the business. The relationship between a practice and its team, and between a team and its patients, is the asset being acquired. A practice with strong clinical culture and a loyal associate base will outperform one with better headline numbers and a fragile team almost every time. Culture is genuinely difficult to quantify. It is not difficult to assess if you know what you are looking for. And what you are looking for, ultimately, is whether governance inside the practice is functioning. A well-governed practice has culture. A badly governed one does not.
The best acquisitions are the ones you do not do
Discipline is the most underrated acquisition skill, and it is the first to collapse when the market moves. The pressure to deploy, hit targets, and maintain momentum is real, and it intensifies when competitors are buying. The ability to walk away from a deal that does not meet your criteria, not because the numbers are wrong but because the governance reality does not match the paper, is what separates groups that build sustainable portfolios from those that spend the next five years managing the consequences of moving too fast.
The market is moving again. That is good news. It is also the moment that historically separates the groups that emerge from the next cycle stronger from the ones that quietly destroy value through deals they should not have done. The difference, in my experience, comes down to whether governance was the first question in diligence or the last.
Acquisition is a craft. The groups that treat it as one, particularly when everyone else is in a hurry, will build the businesses still standing at the next correction.
Andy Sloan is the founder of Sloan Strategic Advisory | sloanstrategic.com