Dentists in the U.S. have sued Zahn Parent, an affiliate of dental service organization (DSO) North American Dental Group (NADG), seeking data that will explain what may have diluted their ownership shares in the firm, potentially hurting their retirement and finances.
In a suit filed June 30 in the Court of Chancery in the State of Delaware, TF Dental, Braces LLC, and individual dentists and practices across the U.S. claim they were given ownership shares of Zahn as part of their compensation and investment with North American Dental Group.
The more than 100 dentists who filed the suit are asking the court to compel Zahn to allow them to inspect and copy Zahn’s corporate books and records. The dentists are seeking any financial reports, tax returns, definitive agreements, offers, term sheets, valuation documents, or other transaction documents “in light of a recent event that has purportedly reduced the valuation of their membership units and has significantly diluted their percentage ownership in Zahn,” according to the lawsuit.
“The dentists are seeking to uncover management decisions that significantly changed their ownership value in the company and may have diluted and negatively impacted their retirement and other financial support,” according to a statement made July 26 by an executive committee of dentists. Rochester, NY-based Harris Beach, one of the law firms representing the plaintiffs, released the statement on behalf of the dentists.
NADG did not respond to a request for comment, and Zahn representatives could not be reached for comment.
In the suit, the dentists claim that they were forced to sue after attorneys representing the dentists alleged that they sent a letter in May to Zahn requesting the above information, but the company refused.
“The company cannot deprive the minority equity owners of information that is reasonably necessary to evaluate the value of their equity interests or to assess potential legal claims related to their minority ownership,” according to the dentists’ statement.
Furthermore, some of the dentists who still work for NADG fear retaliation for attempting to seek the requested information.
“Despite repeated requests, the company has refused to provide any assurances that the company will not retaliate against doctors who attempt to exercise their rights as equityholders,” according to the lawsuit.
Currently, NADG, which is headquartered in Pittsburgh, owns and operates about 240 practices in 15 states.
In 2019, Swiss investment firm Jacobs Holding acquired NADG, creating the first transatlantic dental group. Jacobs is the majority owner of Colosseum Dental Group, which currently operates 375 practices in nine countries in Europe. This acquisition expanded Jacobs’ reach into North America.
