The dental industry is facing particularly extensive holding periods for private equity investments, according to a recent analysis from Pitchbook.
Five notes:
1. The dental sector in the U.S. and Canada is seeing the longest holding times compared to other healthcare sectors, including the mental health, musculoskeletal, vision and primary care sectors.
2. Thirty-seven dental platforms have remained in private equity managers’ portfolios for more than five years, Pitchbook reported. Seventeen of those platforms have been in portfolios for more than seven years.
3. The challenges with investment exits are being compounded by struggles with retaining physicians due to changes in compensation structures after deals are made.
4. Pitchbook reported that there are fewer exit opportunities, particularly for larger platforms, which has created a backlog of platforms that need to be sold that is outpacing the number of buyers.
5. Pitchbook added that this trend could lead private equity managers to transfer platforms into continuation vehicles.