DSO deals are coming back, but not like before

Dental support organizations have reshaped the dental market, but 2026 could be a turning point for deals, valuations and competition. Vince Nardone, co-chair of the dental/DSO industry team at business law firm Benesch, shares what he’s seeing in the deal space and what practice owners should expect in the year ahead. 

—Interview by Carrie Pallardy, edited by Bianca Prieto

Are there any big trends you are observing in the DSO deal space this year?  

When we went into 2025, we were optimistic about what '25 was going to bring to us, even though we were still dealing with some interest rate complexities in the deal market.

But as we saw in 2025, what we expected ultimately did not happen. Into 2026, right now, I think we are cautiously optimistic as to what that deal activity is going to be. I would say, however, that we are certainly not expecting to see the activity that we saw in 2020, 2021 and 2022 at this point. 

We do expect moderate growth and an increase in activity for 2026 on the DSO side. And that includes an expectation that some of those DSOs will attempt to go to market, meaning selling the DSO assets to a third party.

We also believe that we will see some disruption in the market in 2026 on the DSO side. I think we're going to see some financial workouts where some DSOs may have put themselves in a position where they're not able to continue to operate as is, including payment of leases and payment of overall operations and the inability to go to market and therefore pressures coming from a number of different places, including maybe a loan with a third-party lender that needs to be renegotiated. 

Does this mark any change from previous years?

When we think about the deal flow, everybody is talking about the interest rates. We were seeing the peak of the interest rates in Q2 and Q3 of 2024, like 5.5%. We hope that by the end of 2026, with a couple more interest rate cuts, we're looking at maybe closer to 3% for 2026 and then into 2027.  

When we take a step backwards and look at how those interest rates impacted the deal activity, DSOs in 2020, 2021 and 2022 were purchasing practices at a very significant rate and, in some instances, were overpaying for those practices. 

Now in 2026, those same DSOs are experiencing a slowdown in terms of what they were hoping to exit that market at some point this year. But they're not able to get the multiples that they need to satisfy the doctors who are now partners of theirs, as well as their third-party limited partner investors, in terms of their return on their investments. 

Certainly, in those earlier years, we did have lower interest rates, which allowed for higher valuations and more willingness of doctors to sell in that context.

What should dentists looking to sell or buy a practice this year be thinking about? 

The buying dentist is continuing to compete against DSOs for the purchase of that practice. I do believe that the market is pretty open in that regard and competitive, certainly allowing buying dentists the opportunity to purchase those practices and selling dentists being more willing to sell to a private doc today than to a DSO. 

I think we will see an uptick in the market from one doctor purchasing another doctor's practice. One, because the interest rates are going to allow for that. It's going to allow the selling doctor to get a higher valuation. Two, is that the lenders are certainly competitive right now, and the opportunity to obtain good interest rates as well as other terms of those loans is also good right now. 

On the sell side for an individual doctor, the market is really good. They have a significant amount of flexibility in terms of what that succession plan looks like for them. One is selling to an individual doctor. Two is being sold to an associate or other key team member within your practice, to the extent you live in a state where you can sell to a non-licensed professional. Then, there is the opportunity to sell to a dental support organization or some similar structure.

How do you foresee the dental market continuing to evolve? Do you think there will be room for the DSO model and the independent practice model?  

I think there will be a balance, and it will be significantly different than the medical physician side. There will always be space and opportunity for that individual or group practice that is owned and operated by the dentist or specialists within the dental industry for a number of reasons, but mainly because of the relationships with the patients and the relationships with their team members.

I do hear sometimes fears about the DSOs taking over the market, and I do not believe that is true or will ever happen. On the other side of that, I also believe that there will continue to be a market for DSOs, and I think the market will continue to grow for DSOs in both the general practice side and each specialty practice. The growth has not subsided at this point. I do believe that it will continue to grow for another five to 10 years. 

This conversation has been edited for brevity and clarity.

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Dental Bite is curated and written by Carrie Pallardy and edited by Bianca Prieto