Once upon a time, the dental world recognized “seasonality” as a reason for a downshift in new office openings / start-ups (de novo) and mergers and acquisitions (M&A) activity. Historically, the summer months and winter holiday seasons experienced reduced activity, as dealmakers' inboxes saw more “out-of-office” auto-replies than actual responses. It seems now, however - at least in the M&A world - that Q4 means increased deal flow and picking up the pace on dental transitions to get closed before the ball drops on New Year’s Eve. On the de novo side, dental providers also battle increasingly challenging market conditions to launch their practices. What’s the rush, you may ask? Well, with interest rates continuing to rise and downward pressure on buying/spending power, it’s imperative that these providers get operational sooner rather than later.
This race to finish strong is not necessarily a bad thing. Increased start-up and transaction volume means commerce creation and a boost to our economy that many fear is facing a significant recessionary period. Though outside thought may be that the buying, scaling and selling of dental practices does not touch enough of our population to have an impact, this is flawed thinking. Combating recessionary pain points requires job creation, increases in buying power, and new strategy implementation to achieve growth in the face of mounting adversity. While those outside the dental start-up and M&A communities may view such transactions as the “rich getting richer,” the underlying result is quite the opposite.
Let us consider the some specifics. First, as more practices are opened/expanded, we combat unemployment increases. Further, forward-thinking practitioners create wealth both for themselves and their teams, not to mention patients are able to obtain treatment they desperately need or want (see our comments on access to care in a recent blog post). Even within the elective side of dentistry, there are countless studies showing the correlation between an increase in one’s self-image and a productivity boost ("Look at my new smile, now watch me crush it on Zoom!"). That increased productivity further combats recessionary effects. The benefits go far beyond what most of society realizes.
We say all of the above to present our humble opinion that building practices and/or transacting in the M&A world are proven anti-recessionary measures. If we are going to battle the economic challenges ahead, we must forge through the fear factors and continue to literally cultivate commerce. We toast to everyone in the de novo and M&A spaces, respectively, and hope for a prosperous and mindful Q4 for all!