With the passage of the One Big Beautiful Bill Act (OBBBA) and the rise in tariff-driven operational costs, the dental mergers and acquisition (M&A) landscape is shifting in ways that practice owners can’t afford to overlook. While valuations remain strong for high-performing practices, achieving a premium exit is more complex when navigating today’s financial, political, and operational headwinds.
Here’s how these broader economic policies are directly impacting dental practice transition, from deal structure and buyer behavior to after-tax proceeds and valuation pressure.
Sale proceeds and tax/wealth planning
Higher tax exposure and policy shifts can impact post-sale outcomes
Ryan Mingus.
The OBBA introduced several sweeping changes to the financial environment that directly affect the wealth planning side of a practice sale. Among the most significant are:
- A rollback of certain healthcare-related deductions, including depreciation benefits tied to equipment-heavy practices and interest write-offs tied to real estate or leveraged buyouts
- A lower threshold for Medicare surtaxes, increasing effective tax rates for high-income earners, including many dentists
- More scrutiny around pass-through entities and trust structures used to mitigate capital gains
While we’re not certified public accountants or wealth advisers, we’ve seen firsthand how these shifts can potentially alter the net proceeds from what looks like a strong headline offer.
One of our first recommendations for owners even considering a sale is to bring in a wealth planning team early in the process. With capital gains exposure increasing and deal structures becoming more complex, strategies such as installment sales, equity rollovers, and proper entity structuring can make a material difference in your post-sale net proceeds.
Valuation trends: What’s holding and what’s changing
Strong dental practices are still commanding premium multiples, if the numbers hold up
Dental remains an active vertical in healthcare M&A. General dentistry and specialty practices with clean books, efficient staffing models, and consistent collections continue seeing high multiple EBITDA (earnings before interest, taxes, depreciation, and amortization) offers, especially in competitive metro- or group-oriented markets.
But here’s where many owners are caught off guard. We’re no strangers to working with practice owners who present fantastic financials, everything trending up and to the right. But when we roll the numbers forward to reflect more current trailing 12 months performance, we sometimes see margin compression and signs of a slowdown. That may be due to staffing changes, inflation on supply costs, or softening patient flow -- none of which are uncommon right now.
While these moments don’t revoke a deal, they underscore the need for updated financials and an adviser who can proactively frame the changes in a way that assures buyers. Dental service organizations (DSOs) understand that no business is immune to short-term fluctuations, especially in a post-OBBBA, inflation-aware economy. What they want is context and a clear plan. In many cases, DSOs are banking on their ability to leverage scale and infrastructure to reverse those trends post-close.
Buyer sentiment: Still active, more disciplined
The appetite is there. But DSOs are sharper, more data-driven, and focused on the long-term fit.
DSOs and private equity groups remain active in the dental space, especially those with existing infrastructure in place looking to grow by acquisition rather than de novo. Today’s buyers are less emotional and more methodical.
They’re digging deeper into these factors:
- Production per provider
- Provider churn
- New patient trends and case acceptance
- Insurance plan concentration and Medicaid exposure
- Operational leadership and long-term clinical stability
In the context of OBBBA’s changes, particularly with the risk of reduced Medicaid reimbursements and increased patient out-of-pocket costs, buyers are adjusting their diligence models to focus on resilience and scalability.
Still, the right deal with the right structure can command significant interest. The differentiator is preparation and a clear narrative around both short-term performance and long-term potential.
What Tusk is advising dental practice owners now
If you’re considering a sale in the next one to three years, here’s what we’re telling our clients:
- Start with a valuation that reflects your most current performance. Don’t rely on 2023 numbers or best-case annualized models. We build our analysis around what’s happening now, because that’s what buyers are doing.
- Get your financials in order. DSOs will scrutinize margin trends, EBITDA adjustments, and patient retention metrics. Practices that show discipline -- and can speak to short-term setbacks -- are well positioned.
- Loop in a wealth adviser. Even the most competitive deal can lose value if it’s not optimally structured. Consider issues like tax deferrals and equity participation. How you sell matters as much as what you sell for.
- Have the right story. You may not be able to control every trend in your business, but you can control how you present it. Acknowledge the headwinds, and show buyers how the right partner can help you accelerate through them.
- Control your own timeline. Although there is no way to accurately “time the market,” we can be certain that the goal of this presidential administration is to lower interest rates. If the rate goes from 4.50% to 3.25%, that is a nearly 30% decrease and is still higher than rates in 2019. This will have a material impact on valuations, deal structures, and the number of active buyers.
The dental market is still strong, but the bar is higher
Buyers are still buying. Valuations are still attractive. The difference between a good exit and a great one comes down to strategy, structure, and execution.
If you’re curious where your practice stands or want to understand what a DSO deal could look like for you, we’d love to connect. We’ll show you what’s possible in this market.
Ryan Mingus is managing director of Tusk Practice Sales and has more than 12 years of sales and leadership experience in the dental and healthcare industry, most recently as the business development director for strategy and optimization at Align Technology Inc. Mingus earned his bachelor's degree in economics and business from the Virginia Military Institute and his Master of Business Administration from the University of San Diego. He also held the rank of captain in the U.S. Army National Guard.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
