M&A

Private equity is still in on dental, but now it wants proof

Private equity hasn't fallen out of love with dental, but it has gotten pickier about who it takes to dinner.

Driving the news: Dental private equity (PE) deal count fell 36.5% year over year in 2025, per PitchBook's Q4 Healthcare Services Report—the steepest drop of any major healthcare services subsector, even as broader healthcare PE deal activity rose.

• General dentistry, orthodontics, endodontics, periodontics, and pediatric dentistry all contracted. The lone exception was oral surgery, which grew 9.1%.

Why it’s happening: Two forces are colliding. PE buyers are still digesting COVID-era valuations and the debt loads that came with them, and the credit markets that finance those deals are getting tighter at exactly the wrong moment.

• JPMorgan recently began marking down private credit loan portfolios and pulling back on lending to private credit firms.

• That matters for dental because private credit funds are often a primary source of leverage for DSO acquisitions and recapitalizations. When JPMorgan squeezes the lenders, the lenders squeeze the sponsors, and the sponsors squeeze the deal terms.

What’s next: Deals are still going to get done in 2026, but they’ll look different than in past years. Healthcare practice sales advisory TUSK reports that 78% of DSOs it surveyed expect recapitalizations within 12 to 36 months, while 61% say their PE backers expect a moderate or high uptick in 2026 deal volume.

• PitchBook counted 37 dental platforms past the five-year mark as of early 2024—a number that has only grown since—and industry analysts say almost every DSO in the market is now overdue for a recapitalization.

• More activity, combined with tighter conditions, means more scrutiny. Premium assets should still command premium pricing. Average assets are more likely to face longer timelines, heavier diligence, and tougher negotiations.

What separates the winners: The spread between top and bottom offers has never been wider, and the benchmarks are getting sharper.

• Same-store growth is the first filter. Nearly 40% of dental practices didn't grow year over year in 2025, which makes consistent organic growth a genuine differentiator.

• EBITDA margins at or above 20% are the floor for investment-grade assets. Below that, expect steep discounts and longer timelines.

• Solid staff and doctor retention is a meaningful metric that buyers and lenders will scrutinize. Leaders in the space achieve retention rates in the mid to 90% range.

And one big green flag: A strong oral surgery practice. This can really set a practice apart for potential buyers, as it enjoys structural advantages like referral-driven patient flow, higher reimbursement, and limited provider supply due to 4 to 6 years of post-dental-school training. At least eight PE-backed platforms are actively consolidating the space.

Bottom line: The next 18 months will separate DSOs that built real operational engines from those that rode leverage and a hot market. All indicators point to 2026 as a major recapitalization year, but the capital will flow to platforms that can defend their cash-flow story under brighter lights.