Dentistry in the UK and Europe is moving very fast - creating numerous opportunities for mergers and acquisitions. Exciting projects are going to be available for dental groups and investors. It is our view that consolidations can be positive as it becomes advantageous for regulators to overview single handed practitioners and can spread risk by joining other, faster growing markets.
The merging and partnerships of groups of dental practices is increasing in numbers in the European zone, with the European models pushing for new customer growth to guarantee sustainability.
Consolidations, a swift move towards digital dentistry and a need for constant improvement in the customer experience are all industry realities.
BUPA acquired Oasis for an estimated £835m, with 380 practices and 1,800 dentists. The company was previously acquired by Bridgepoint in 2013 for c.£187m and grew after purchasing Smiles, Apex Dental and DenDental, as well as individual practices and labs. Along with a few other large Dental Body Corporates, there are around 90 smaller chains ranging from 5-30 practices each. Recently, two European based investor outfits, Jacobs and Core Equity, invested in the UK Dental Industry, respectively in Southern Dental and Portman.
In the UK, dentists can sell dental practices for around 6 times EBITDA, or roughly 130-140% of gross revenue depending on the type of practice and location. In Italy, the dentist often pays to join a franchise. A big Spanish group, Vitaldent, are a large player in Italy with 110 outlets. It is gradually converting from a franchise model to one which is wholly owned. Another important chain is Dental Pro with over 130 outlets, following acquisitions of Giovanni Bona Clinics and Dr Dentist streets clinics in Milan area. Other large players include Dentalco-op and CareDent but there are a myriad of other smaller, regional chains. There are in excess of 500 outlets in chains today out of a total of more than 38,000. The Italian government pays for as little as 4% of dental costs in Italy and this is concentrated in particular areas where the state runs dental hospitals. Centri Dentistici Primo with 40 clinics mainly in Turin, Bologna, the Milan area and Puglia, as well as Denti & Salute with 12 sites - are all growing groups to keep an eye on. Excellence in implantology is delivered by Cliniche Favero, with their presence in North Italy and London.
The market leader in Swedish dentistry is Praktikertjanst, a €1bn cooperative of dentists and family doctors, followed by Colosseum (a merger of the two largest practices in Norway and Sweden in March 2014). OralCare in Sweden specializes in providing mobile dentistry services to the elderly at home and in nursing homes and is planning to expand internationally. Terveystalo is a Finnish company offering occupational healthcare services with 170 clinics in over a hundred locations though Oral is still the biggest player.
Switzerland is a fast-developing market. The market leader is Zahnarztzentrum, which comprises of 32 clinics in the city centres. Adent is the second largest player, with a total of 18 dental clinics following the acquisition of 5 new clinics in the German–speaking area of Switzerland. Swiss Smiles has raised €44m in 2015 and has 13 clinics in Switzerland plus clinics in London, Russia and India.
The three large chains are - Samenwerkende Tandartsen with 32 practices followed by Dental Clinics and Ivory & Ivory. DentConnect is a fast growing group of dental practices. Founded in the Netherlands, the company has grown rapidly to the number 1 position in the Dutch market. Since 2015 DentConnect has expanded to an international level. The company now operates in 5 European countries, based on its Pan-European ambition. The group has a proven track record in successful mergers and acquisitions.
Vitaldent is a large dental chain operating across Spain, Portugal and Italy. It has 460 clinics and claims to be three times larger than its nearest rival in Spain, where it claims an impressive 7% market share. Dentix is another significant company, owning a 180 clinics in Spain and two in London. Vivanta is the third largest provider in Spain by revenue and has ambitious plans for expansion. Realza Capital is a company focused on consolidating high-end dentistry in Spain by merging Clínicas Aparicio in Barcelona with Clinico Perio in Madrid. Both carry out dental implants and dental surgery. In Portugal private equity house Inter-Risco is trying to consolidate the market. In 2011, Inter-Risco invested in 32 Senses, a buy-and- build dental project which planned to buy around 150 dental clinics and fund the roll-out of another 30 to 40 greenfield facilities by 2014. It has now bought chains Alba and Smile Up. Luso Smile, a large clinic north of Porto, has a strong presence.
At Pluto our directors have a range of nationalities - English, Italian and South African. Though there may be a mix of cultures, there’s always been a shared vision and this has allowed the team to gel.
Our Partner, Max Bazzucchini, has a large network of dental contacts in Italy and knows the industry very well. Across the UK and Europe, demand is outstripping supply across the range of prices. Excellent mergers and partnerships are happening all the time, to be part of it you start by broadening your mind.