M&A

Private equity activity is back, but don’t expect a clean exit

If your DSO took growth capital in 2018–2020, the investment clock is probably chiming. In the last cycle, that could often mean a tidy cash-heavy sale or, for the bold, an IPO. In 2025, the window for an exit is still open, but the break might look more like a partial extraction than a full pullout.

Driving the news: Private equity (PE) exit activity has reopened in 2025, with US $470 billion in PE exits year‑to‑date, a 40% increase over the same period in 2024, according to a new report from EY.

• Meanwhile, the booming private credit market is attracting massive sums (like the $50 billion announced by JPMorgan Chase earlier this year) that needs to be deployed.

Yes, but: All-cash buyouts that allow owners to walk away are likely not realistic for most DSOs. More common are deals that allow owners to take some money off the table while remaining involved in the business. You can cash out, but don't expect to clock out just yet.

• The broader PE market for secondaries is at a record high this year, and in dentistry we have seen large recapitalizations of DSOs (like Silver Oak’s investment in Smile Partners earlier this year) that reinforce that trend.

What this means for you: If you’re searching for liquidity in the coming months (or deciding whether to go to market), don’t expect to find an exuberant, 2021-era landscape. Buyers are looking for deals, but they can afford to be selective.

• Expect partial liquidity over full exit. Continuation funds, minority recaps, and structured preferred are common paths to extend holds while paying insiders.
  

• Earnouts are still prevalent and increasingly complex. Earnout prevalence is somewhat above the historic average, and earnout terms are becoming increasingly complex, relying on multiple metrics.
  

• Greater focus on tight operations. Investors in DSOs want to see “seasoned EBITDA,” proof of resilience in tough conditions, and clean tech stacks, according to Dykema’s Brian Colao.

Want to maximize your value? Prove consistent EBITDA over multiple consecutive quarters, set yourself apart from the pack by showing growth that’s not just driven by price hikes, and prepare for a deal that keeps you involved with realistic earnout targets.

The bottom line: If you’re considering whether to seek PE financing, there is a real window of opportunity today. Dealmaking is starting to come back, exits are up, and the market may become more crowded next year as more DSOs look for capital.