Private equity interest persists, but changing conditions are altering the pace and nature of deals.
By Greg Thompson
Private equity (PE) has long cast a shadow over orthodontics, investing in practices at different points in the industry’s evolution. But recent years have brought shifts in both opportunity and perception. While some orthodontists see the potential for financial growth, others are skeptical about what’s lost in the process—from autonomy to profitability. Industry insiders like Bill Layman, DMD, MBA, and Anil Idiculla, DMD, point to rising debt costs and increased marketing by PE firms as signals of a market in transition, raising key questions about the future role of outside investors in orthodontic private practice.
Fewer Sales, More Advertising
Over the last 5 years, Layman has seen the development of a “cottage industry” of fiduciaries seeking to help orthodontists find a lucrative exit—all while seeing a drop-off in sales to PE firms.
“I’m hearing from fiduciaries that the number of practices being sold to private equity has dramatically decreased,” says Layman, who completed his MBA at the Wharton School of the University of Pennsylvania in 2017 and who has spent the last 20 years running his private practice in Clearwater, Fla. In response, he says, these private equity firms have increased their advertising. “The advertising increase is a signal that these firms are competing for a smaller number of potential sellers.”
Rising Debt Costs Change Appetite
Another factor at play, according to Anil J. Idiculla, DMD, owner of Colorado-based Peak Orthodontics and director of doctor relationships and doctor partner with Corus Orthodontists, a dental partnership organization (DPO), is the rising cost of debt over the last 2 to 3 years.
“I think that has decreased the appetite of groups to invest all around, let alone in orthodontics,” says Idiculla. “However, history has shown that investing in orthodontics can be a very smart decision when you pair the correct investors and the right doctors. The return is high enough in private practices that it is appealing to outside investors.”
Questioning the Payouts
Fiduciaries are filling a niche, largely working with practitioners who are looking to retire. According to Layman, older established orthodontists have heard that selling to PE firms can be more lucrative than selling to young orthodontists who need bank loans. Is the perception true? Layman is not so sure.
“Let’s say you have a $2 million practice and you agree to a private equity deal,” he explains. “They are going to pay you, on average, 60 to 70 percent of that valuation in cash. Then they are going to make you work for five more years at a reduced rate compared to what you were making as an owner. Overall you don’t make more money. It’s a bad deal. I think you’re better off selling to somebody and getting the best deal you can and having a great company vs having an ok company and having to stay for five more years—hoping you get this cash out at the end—which may not happen.”
High-Value Deals Persist in the Market
While individual practice sales to private equity may indeed be slower, large transactions have still cropped up, such as Smile Doctors’ March 2025 acquisition of myOrthos, an orthodontic support organization (OSO) with more than 70 affiliated locations in 13 states. This acquisition expanded Smile Doctors’ network to more than 550 affiliated locations across 36 states, driving greater provider density in key growth markets.
Smile Doctors had the resources thanks to a 2022 capital infusion from Thomas H. Lee Partners, LP, a private equity firm investing in growth companies. It adds up to a lot of money changing hands, all while sales pitches continue to evolve.
“A lot of the OSOs and DSOs are working to shift how they are marketing to orthodontic offices that may be willing to sell to them,” Layman says. “Now the process is: We will let you keep some equity and we’ll buy a piece of your practice. So deal velocity is lower, but penetration of private equity dollars into the dental profession, just based on dollars, has gone up. Smaller players that are failing are being acquired.”
Feeling the Effects
Beyond the financial calculus for practice owners, private equity involvement often reshapes daily realities for associates and clinical teams.
Orthodontic associates may get better benefits and bonus incentives if the company is sold to a larger corporate entity. “With the right investors and the right doctors, you can uncover certain benefits with non-orthodontic eyes,” Idiculla says. “Efficiencies in treatment could be improved for a better patient experience. It depends on that marriage.”
On the negative side, Layman laments, “You will likely lose vacation days and autonomy, and lose the ability to treat patients in exactly the same way you want to treat them.”
“If there’s a decrease in the quality of clinical care [after PE involvement] that is the ultimate nightmare,” Idiculla confirms. “Because the patient suffers and that’s not why we are in this profession.”
Autonomy and Control at Risk
If you’re an owner who sells to PE, Layman is unequivocal. “If you are trying to make more money, this is not the best choice over a 3- to 5-year period,” he says. “You lose complete control of your profit and loss. You lose autonomy. You lose control of your write-offs. When you don’t own the till, you can’t really affect change.”
Jahnavi Rao, DDS, MS, is a bit more diplomatic. She concedes the cons but contends that the impact of PE involvement can vary depending on the structure of the partnership and the level of operational control exerted by the investors.
“One commonly cited downside is the potential erosion of clinical autonomy,” says Rao, an independent consultant who partners with DSOs, DPOs, and OSOs to streamline operations. “As business metrics begin to take precedence, orthodontists may feel pressure to meet financial targets, which can influence clinical decisions. There is also the risk of commoditization of care.”
The Upside of Capital
The upside comes down to extra money and the improvements it can bring. “An immediate influx of capital,” Rao says, “can enable practices to expand rapidly, invest in new technologies, streamline administrative functions, and improve overall efficiency.”
Patients in the Middle
For patients, it all depends. Research from Columbia University suggests that private equity investments in health care may increase costs and degrade quality. “Private equity has been rapidly acquiring health care operators across almost all medical specialties, both throughout the U.S. and beyond,” says first author Alex Borsa, MA, a PhD student in sociomedical sciences and sociology. “Most patients are unaware that these changes are taking place, and that their health care is ultimately owned and managed by financiers.”
The study from Columbia’s Mailman School of Public Health even offers a theory as to why private equity may prefer the health care field. “Private equity is uniquely interested in health care because of the many loopholes and cost-cutting strategies that exist within this industry,” says Joseph Dov Bruch, PhD, assistant professor of public health sciences at University of Chicago, the study’s co-senior author.
Why Orthodontics Attracts Investors
According to Rao, most projections point toward continued growth in PE funding. “Economic factors such as interest rates, inflation, and investor appetite for healthcare-related assets will continue to influence the pace and scale of this involvement,” says Rao, who has held numerous national and regional leadership roles within the AAO. “The increasing interest from private equity firms underscores the perception that dentistry, and orthodontics in particular, is a stable and profitable industry.”
While Columbia’s study listed “loopholes and cost-cutting strategies” as prime attractions for PE, Rao believes more conventional reasons are also at play. “Investors are often attracted to health care sectors with steady cash flow, recurring patient demand, and potential for consolidation—characteristics that dental practices typically exhibit,” she says. “From a business standpoint, this level of investment does reflect confidence in the long-term viability of the profession.”
What Comes Next
Looking ahead, Rao anticipates that PE involvement in orthodontics will continue to rise significantly. She says, “The current consolidation trend shows no signs of slowing, and with many independent practices considering succession planning or retirement, PE firms see fertile ground for further expansion. Unless there are major shifts in regulation, reimbursement models, or macroeconomic conditions, the sector will likely remain attractive to investors in the near future.” OP
Photo: ID 107064372 | Seo © Marina Putilova | Dreamstime.com
Greg Thompson is a contributing writer for Orthodontic Products.
