MAJOR BANKS ARE COMPETING FOR DENTAL LOANS

DENTAL PRACTICES HAVE VERY LOW FAILURE RATES

Dental loan average failure

rate is:

SBA loan average failure

rate of:

VS<1% 17%

4 REASONS the current DENTAL PRACTICE SALES MARKET is like the 2008 HOUSING BUBBLE

Increase in private equity investors and the rise in dental practice management companies have led to a consolidation in the dental practice market.1. INFLUX OF INVESTORS

4. ABUNDANCE OF BUYERS

3. INFLATED PRICES

2. EASY BANK FINANCING

PRIVATE INVESTORS

Invested by JLL Partners

$398Million

Invested by Ontario Teachers’ Pension Plan

$1.3Billion

Dental practice management companies represent:DENTAL PRACTICE MANAGEMENT COMPANIES

by 202050-60%

in 201230%

in 199011%

STAGES OF CONSOLIDATION

100%90%80%70%60%50%40%30%20%10%

0%

Stage 1Opening

Stage 2Scale

Stage 3Focus

Stage 4Balance and Alliance

Insurance Banks

DrugsBreweries

Foods Toys

Steel Makers

Truck BuildersShoes

Distillers

DefenseTobacco

Dentistry

TIME

BANKS ARE MORE GENEROUS IN TERMS AND CONDITIONS ON DENTAL LOANS

Was the average loan value in 2010

80%Is the average loan

value post 2010

Up to

100%

Baby boomers have been holding on to practices so fewer are for sale

Delayed retirement

Fewer practices for sale

Higher Prices

ARTIFICIAL SCARCITY OF PRACTICES

increase since 199020%

There are a large number of institutional investors + multi-practice dentists building group practices

INVESTORS + MULTI-PRACTICE DENTISTS There are more dentists that will be entering retirement than there will be new dentists so many dentists will have no qualified buyer for their practice.

RETIRING DENTISTS VS NEW DENTISTS

2,000

3,000

4,000

5,000

6,000

1970 1980 1990 2000 2010 2020

Graduates

Retirees

Projected

The % of female dentists is reaching 50%. More graduates today focus on work-life balance and do not wish to own a practice.

DEMOGRAPHICS ARE CHANGING

2,000

3,000

4,000

5,000

6,000

1990 2000 2010 2020

FemaleMale

of annual revenue

Historic Practice Sale Price

65%of annual revenue

Current Practice Sale Price

Up to

100%

PRACTICE SALES

DENTISTS RETIREMENT

54% of dentists age 55 and older delayed retirement after the crash in 2008 (ADA 2010)

Average retirement age is now 74

DENTAL PRACTICES

Due to the increase in retirement age, there are fewer practices available for sale

This decrease in supply of practices for sale has caused

prices to increase

40%

?

Like all bubbles, this one is UNSUSTAINABLEDentists age 50+ must harvest as much value for their practice as possible, NOW.

of dentists rely on the sale of their practice to fund a significant part of their retirement.

Current pricing 100+%

Will drop back to historical averages at or below

65%70%

presented by:

678-907-4608www.southeasttransitions.com