New data shows DSOs preparing for increased acquisition activity as recapitalization cycles accelerate.

, /PRNewswire/ -- TUSK Practice Sales, the premier healthcare M&A advisory firm, released its Q1 2026 Dental M&A Market Report, providing a comprehensive look at the forces shaping the dental practice sales environment in 2026.

The dental industry report analyzes 2025 market conditions, macroeconomic drivers, and proprietary buy-side survey data from DSOs nationwide to give practice owners a fact-based view of where the dental market stands and how buyers are underwriting risk and growth.

Shifting Tides For Dentists

Practice Ownership Trends Create Roadblocks For Doctor-to-Doctor Sales

Since 2005, dental practice ownership rates have steadily declined for younger age cohorts, particularly dentists 44 and younger, reflecting a real shift in how early-career dentists approach practice ownership. The ADA Health Policy Institute reports that overall ownership among dentists in private practice declined from 84.7% (2005) to 72.5% (2023), with markedly lower ownership rates among younger dentists relative to older cohorts. (ADA HPI, 2025)

This is not an indicator that younger dentists will never become owners; however, it does create increased uncertainty for late-career owners who assumed a traditional associate buy-in / doctor-to-doctor sale would be the most likely exit path. The "associate pipeline" is still real, but it is less predictable, takes longer to develop, and is increasingly influenced by external constraints.

Two structural drivers consistently show up in buyer (and seller) conversations:

Rising cost of dental education
- Tuition and fees have increased materially over the last decade. ADEA's most recent trends reporting shows clear upward movement over time, contributing to higher debt loads and longer timelines to ownership for many new dentists. 2023-2024 nominal cost in comparison to 2014-2015 had risen by +30% for public and +38% for private institutions.(ADA HPI, 2025)

Higher cost of borrowing and a higher "barrier to entry" for ownership
- Even as rates moved lower in late 2025, the market remains in a post-2022 environment where lenders underwrite cash flow conservatively, and the cost of capital is a more prominent variable in decision-making than it was earlier in the last cycle.

As a result, practice owners seeking to sell to their associates are increasingly encountering one of two realities:

They cannot recruit the right associate in time, or
They have an associate, but that associate may not be prepared (financially or strategically) to buy on the seller's timeline.

Practice Modality By Career Stage
Late-career dentists remain the most likely cohort to practice in a solo setting, while younger generations increasingly prioritize work-life balance and often prefer being part of larger organizations where they can find operational support and professional camaraderie.

For owners in their late 50s to early 60s, it becomes increasingly important to thoroughly map an exit plan and understand their realistic options, especially if the plan has always been "sell to an associate." Many late-career dentists whose retirement plan was a doctor-to-doctor transition run into problems with:

Finding an associate interested in taking on the risk of owning and operating a dental practice
Having an associate who is clinically interested, but not positioned to make a purchase.

This is occurring alongside what is often referred to as a "Silver Wave" of aging business owners, where the U.S. Census Bureau has noted around 4 million baby boomers, of which a significant portion of are business owners, retire annually. (Pew Research Center, 2020)

For DSOs, this signals an influx of practices coming to market over time. It also increases scrutiny on practices where:

The owner is unwilling to remain on board for 3–5 years post-sale, or
There is no clear succession plan (especially in harder-to-recruit markets).

Historically, late-career owners of single-location, solo practices often relied on early-career dentists (0–25 years in practice) as the most likely buyer group. Today, many of those dentists are remaining in group/DSO settings longer, narrowing the near-term pool of individual buyers and contributing to an increased concentration of solo practices among late-career owners (ADA HPI, 2025). This aligns with ADA observations that younger cohorts are more risk-averse and that higher borrowing costs have further delayed near-term practice ownership.

Dental M&A Trends & Outlook

2025 - A Year Marked By Volatility

In 2025, the dental market was impacted by macroeconomic and policy-driven uncertainty that created volatility in the marketplace. Many groups began the year with a strong Q1, but by Q2, deal volume dipped and remained stagnant for a meaningful portion of the market.

Two macro variables mattered most in buyer behavior and deal pacing:

Inflation Readings and Cost Pressure
- The latest CPI release reported 2.7% year-over-year CPI-U inflation and 2.6% core inflation (excluding food and energy). (BLS, CPI Summary—Nov 2025))
- Even as inflation moderated on paper, practice operators continued to feel cost pressure, particularly in staffing, supplies, and overhead categories that affect EBITDA quality.

Interest Rates / Cost of Capital
- On December 10, 2025, the Federal Reserve lowered the target range for the federal funds rate to 3.50%–3.75%. (Federal Reserve, FOMC Statement—Dec 10, 2025))
- This improved confidence relative to peak tightening, but it did not reverse the broader underwriting discipline that has become normalized since 2023–2024.

Tariffs
- Tariffs created a separate layer of unpredictability for healthcare operators in 2025—especially in categories tied to imported equipment, components, and dental supplies. Importantly, the impact of tariffs was often delayed. In many industries, price pass-through tends to unfold gradually as existing inventories are used up and as procurement contracts reset—meaning the financial impact can show up months after a tariff is announced or implemented.
- In market, owners saw this timing mismatch show up in real-time. Practices that went to market with strong trailing performance early in the year sometimes experienced a mid-year margin squeeze as suppliers repriced and inventory cycles caught up—resulting in TTM EBITDA softening during diligence. That dynamic contributed to slower deal velocity in Q2 and early Q3 and, in some cases, increased buyer scrutiny or more conservative structuring.

Recapitalizations

Recapitalizations ("recaps") are a common feature of the DSO landscape. In simple terms, a recap is a liquidity and ownership event where a sponsor (or a new sponsor/continuation vehicle) invests new capital into a platform, often allowing the sponsor to return capital to its investors and/or allowing doctors and minority holders a liquidity opportunity, while positioning the platform for its next growth phase.

From the perspective of a selling dentist, recaps matter for two reasons:

1. Equity Will Play A Vital Role In Your Outcome.

a. When selling to a DSO or PE-backed group, a portion of the proceeds is commonly allocated to equity. The attractiveness of that equity depends heavily on the quality of the platform you are partnering with, its unit economics, and its ability to grow and ultimately return capital to its investors.

2. Recaps Influence Urgency & Acquisition Behavior.

a. As previously noted, recapitalizations restored confidence in market health and platform durability. But they also create an incentive: in the months leading up to a recap, DSOs are often motivated to partner with premium assets to increase EBITDA and strengthen their story ahead of an exit/recap event.

In our survey of DSO organizations, 78% of respondents indicated their recaps were 12 to 36 months away. Similarly, M&A activity and organic same-store sales were cited as the highest priorities for 2026, with doctor recruitment following immediately after.

TUSK Dental M&A Survey

TUSK conducted a survey of top DSOs nationally to better understand buy-side sentiment on the last 12 months and outlook for 2026. Below are the results.

2025 Deal Activity in Comparison to 2024

The majority of respondents indicated that their 2025 deal volume either remained consistent with 2024 or increased. Taken together, the survey suggests that 2025 was not a "down year" across the board—it was a year where many groups stayed active, but became more selective in what they pursued and how they structured risk.

2026 Deal Activity Outlook

61% of respondents indicated their private equity backers are expecting a moderate or high uptick in 2026 deal volume compared to 2025. This is indicative of improving market confidence and the continuation of acquisition mandates from investors.

With increased acquisition expectations, DSOs are continuously approaching brokers like TUSK to be included in seller processes. A handful of DSOs also expressed concern over the supply of practices available, particularly premium assets that fit their underwriting standards.

"We're increasingly excited for 2026 and growing our network of practices. However, we are actively seeking dental practices to fill that pipeline and are relying more on brokers than before in Q1 of 2026," shared a DSO representative anonymously.

Dentists will have more options in 2026 to find the right partner at the right price.

If buy-side acquisition mandates rise while premium inventory remains constrained, competitive tension increases—particularly for practices that demonstrate clean earnings, stable provider coverage, and scalable operations.

Dental Practice Valuations

Multiples have stayed constant over the last two years.

Across much of the market, headline valuation multiples have not "collapsed" over the last two years. The more meaningful change has been dispersion: premium practices continue to command premium valuations, while average practices are experiencing more friction—longer timelines, greater diligence scrutiny, and more negotiation on price and structure. For premium assets in particular, TUSK observed stronger buy-side demand, which more often translated into competitive processes and increased seller leverage in negotiating terms.

Cash vs. equity mix is playing a larger role in offers.

While valuation is still commonly discussed in terms of a headline multiple, offer composition has become a more important variable. More buyers are using equity as a strategic lever to (i) align incentives, (ii) manage cash at close, and/or (iii) shift risk—especially when the buyer's underwriting assumes value creation through platform performance and post-close growth.

In 2025, it was increasingly common for offers to include one of the following equity structures:

Joint-Venture (JV) Equity: the seller retains ownership at the practice or local entity level alongside the partner.
HoldCo Equity: the seller rolls a portion of proceeds into equity of the parent/platform company.
Hybrid Equity: a combination of retained local equity and rolled parent-level equity.

Additionally, the spread between offers has never been wider. In 2025, it became increasingly common for the difference between a "best" offer and a "middle" offer to be meaningful—reflecting:

differing views on provider risk and transition timelines,
differing tolerance for add-backs and margin normalization, and
differing capital structures and acquisition mandates.

Buyer Scrutiny

When surveyed, historical financial performance and provider risk + stability were the most scrutinized elements in a deal in 2025.

In other words, many DSOs are prioritizing upside risk mitigation over upside opportunity—particularly when they believe earnings durability, staffing stability, or transition coverage is not sufficiently proven.

TUSK 2025 Perspective

In 2025, TUSK closed transactions with 16 unique buyers, including nine first-time buyers for TUSK clients. That breadth underscores why an expansive—and continually expanding—buyer network matters when selecting an advisor: it increases the likelihood of finding a partner that aligns financially and culturally with an owner's exit objectives. Through TUSK's structured process, clients were able to access the full buyer landscape, generating 6+ offers on average to evaluate pricing, structure, and fit.

What DSOs Are Prioritizing in 2026

Based on TUSK's buy-side survey and what we consistently heard from acquirers in 2025, DSOs are entering 2026 with a clearer "barbell" approach: they will compete aggressively for premium assets and remain disciplined (often structure-first) where risk or uncertainty exists. Two forces are converging: (1) many groups are operating with elevated acquisition expectations for 2026, and (2) a meaningful portion of platforms are within a 12–36 month window of recapitalization, which increases focus on adding high-quality EBITDA and de-risking performance.

1. Provider Risk and Clinical Continuity.

a. Provider risk is moving from a "consideration" to a primary decision driver. In TUSK's 2025 survey results, provider risk + stability was identified as one of the most scrutinized elements in deals. Provider risk was also one of the top reasons DSOs stepped away from transactions. This is consistent with what we observed in-market: buyers are less willing to underwrite reliance on a single producer or uncertain transition coverage when acquisition mandates are rising but execution risk remains high.

2. Performance Durability and Trend Direction

a. In 2025, DSOs increasingly differentiate between practices with stable results and those experiencing softness during the process. Historical financial performance was one of the most scrutinized elements in deals, and it was also one of the top 3 reasons why buyers backed away from deals in 2025.

3. Reimbursement Exposure and Insurance Dynamics

a. In 2025, DSOs became more sensitive to reimbursement exposure because the reimbursement environment carries more policy uncertainty—and Medicaid dental dynamics are largely state-by-state, with adult benefits varying materially by state. As a result, buyers are underwriting payer mix more conservatively in markets where legislative or budget changes could affect rates, eligibility, or benefits. For practice owners considering a sale, it's worth staying aware of where your state legislature and Medicaid agency stand on these issues, since shifts at the state level can influence diligence questions and perceived risk in a transaction.

Conclusion

The 2025 dental M&A environment remained active but was characterized by elevated volatility, as macroeconomic and policy-driven uncertainty influenced buyer pacing and diligence intensity. While recapitalizations later in the year supported renewed confidence in scaled groups, underwriting discipline remained high—setting the stage for a 2026 market in which buyer demand is expected to increase, yet transaction outcomes will be determined more explicitly by quantified risk factors, including provider stability, financial performance trajectory, and reimbursement exposure.

2026 Dental Market Outlook
Key Findings

Deal activity was uneven across 2025: momentum in early 2025 moderated in Q2 and early Q3 as volatility increased diligence sensitivity.
Tariff impacts introduced lagged margin pressure: cost pass-through occurred with delay in many cases, contributing to mid-process earnings compression for certain practices in market.
Macro conditions shaped underwriting standards: By late 2025, CPI-U was 2.7% year-over-year (core 2.6%) and the federal funds target range was 3.50%–3.75% (Dec. 10, 2025). As rates eased from peak levels, financing conditions improved—lowering buyer hurdle rates and supporting more competitive pricing and, in some cases, cleaner terms for premium assets.
Buy-side expectations are constructive for 2026: 61% of surveyed DSOs reported sponsor expectations for a moderate or high increase in acquisition activity.
Recapitalization timelines are an important catalyst: 78% of respondents indicated anticipated recapitalizations within 12–36 months, reinforcing emphasis on adding durable EBITDA.
Primary drivers of buyer attrition in 2025: provider risk, declining financial performance, and reimbursement-related concerns were the leading factors cited for DSOs stepping away from transactions.
Valuation dispersion increased: while headline multiples did not uniformly reset, the spread between offers widened as buyers priced risk more divergently.
Reimbursement exposure is underwritten as a state-level variable: payer mix is being evaluated more conservatively, where state policy direction could affect Medicaid dental economics and collections durability.

About TUSK Practice Sales

TUSK Practice Sales ("TUSK") provides M&A Advisory services in the healthcare industry. TUSK has completed over $1.3B of transactions across all specialties. With an in-depth understanding of the marketplace and access to 100's of buyers nationwide, we help our clients confidently pursue M&A transactions that maximize their long-term value. With our significant collective experience of over 125+ years of practice transactions, we offer our clients solutions that help them achieve their strategic and financial objectives. For more information, visit http://www.TuskPracticeSales.com.

Sources

1. American Dental Association Health Policy Institute (HPI). US Dentist Workforce 2025. ADA
2. U.S. Bureau of Labor Statistics (BLS). Consumer Price Index Summary — November 2025. Bureau of Labor Statistics
3. Board of Governors of the Federal Reserve System. FOMC statement / press release — December 10, 2025 (federal funds target range). PCBB+1
4. Federal Reserve Bank of St. Louis (FRED). Effective Federal Funds Rate (FEDFUNDS). FRED
5. PitchBook. Healthcare Services PE exit count by quarter (U.S. & Canada), as of June 30, 2025 (dataset/chart pull referenced in Figure 3).
6. Pew Research Center. Baby Boomers are in the workforce later in life than past generations (Boomers turning 65 per year / per day). Pew Research Center+1
7. Smile Partners USA / PR Newswire. Smile Partners Announces Recapitalization Through New Continuation Fund Led by Commitments From Funds Managed by BlackRock and Hollyport Capital (Feb. 3, 2025). PR Newswire
8. MB2 Dental / Business Wire. MB2 Dental Announces Strategic Investment from Warburg Pincus (Jan. 15, 2025). Business Wire
9. Lone Peak Dental Group. Strategic investment announcement (BlackRock Impact Opportunities Fund). Lone Peak Dental Group
10. dentalcorp. Press release / transaction announcement regarding acquisition by GTCR (Sept. 26, 2025). Dentalcorp Investors+1
11. Park Dental Partners. Park Dental Partners, Inc. Announces Pricing of Initial Public Offering (Dec. 2, 2025). Park Dental
12. Federal Reserve / Dallas Fed / related research. Tariff pass-through and timing effects (macro mechanism reference). Federal Reserve+1

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SOURCE TUSK Practice Sales

TUSK Practice Sales 发布了 2026 年牙科并购市场报告，重点介绍了对诊所所有者的重要更新