Episode 146: Dr. Baird Shares What DSOs Won’t Tell You About Private Equity

“Dentistry is the star right now. It’s what private equity wants.” ~Dr. Bruce B. Baird

You’ve probably heard the term “private equity” thrown around a lot recently. Well the reason is private equity is a natural part of the conversation about DSOs and consolidation of the dental market. 

But what you probably want to know is what it means for you and the value of your practice as a private dental business owner.

I’ve been getting this question a lot recently about private equity, EBITDA, and what it means for independent practice owners and their options for selling their practice for the highest value. 

So today, I am going to shed some light on private equity so you walk away knowing:

  • What private equity is
  • How it impacts the dental market 
  • What private equity might mean for your future

Never miss an episode! Subscribe on iTunes & Spotify. Visit us at http://www.productivedentistpodcast.com


Regan 0:00
Hi, Dr. Regan, Robertson, CCO for Productive Dentist Academy here and I have a question for you. Are you finding it hard to get your team aligned to your vision, but you know, you deserve growth just like everybody else.? That’s why we’ve created the PDA productivity workshop. For nearly 20 years PDA workshops have helped dentists just like you align their teams, get control of scheduling, and create productive practices that they love walking into every day. Just imagine how you will feel when you know your schedule is productive, your systems are humming, and your team is aligned to your vision. It’s simple, but it’s not necessarily easy. We can help. The demand for these workshops is so high that our March 2023 workshop is completely sold out. But there are still seats available for the only remaining workshop in September 2023. Visit productive dentists.com/workshop that’s productive dennis.com/workshop to secure your seats now.

Dr. Bruce Baird 0:58
And dentistry is kind of the, it’s the star right now. It’s what private equity wants and what private equity is. Private equity is actually a fund that is put together for investing. So let’s say a company says, goes out and finds investors and these are these are not people wanting to invest, you know, 50,000 or 100,000. These are families and groups that are interested in investing hundreds of millions of dollars.

Dr. Bruce Baird 1:36
Hello, everyone. This is Dr. Bruce B. Baird and you’re listening to the Productive Dentist Podcast. In this podcast, I will give you everything that I’ve learned over the last 40 years in dentistry, working with 1000s of dentists. I’ll tell you, it’s not that my way is the only way, it’s just one that has worked extremely well for me and I’d love to share that with you, so you too can enjoy the choices and lifestyle the productivity allows. More time for things you love, increased pay better team relationships, and lowered stress. Let’s get into it with this week’s episode of the Productive Dentist Podcast.

Dr. Bruce Baird 2:18
Hi, this is Dr. Bruce Baird with the Productive Dentist Podcast. Today, I wanted to talk, last week before last we talked about EBITA and I was telling you that I was out in Honolulu speaking to a bunch of dentists and nobody knew what it was, and hopefully you have a little bit better understanding of what EBITA is. It’s basically is the profit in your practice. When you take away all the stuff like your car that you expense through, a lot of those things, and that is what we call your EBITA. So if we’re looking at another question that I get, I was just down in San Antonio, on a panel discussion this past weekend at Freedom founders, that’s David Phelps’ course for and it’s not just real estate investing, but it’s a really great course on alternative investing, including real estate, but they have lots of different experts that come in, but the question kept coming up about private equity, and what is private equity and I’m done. You know, when I’ve been doing my research and, and really learning about consolidation theory, which is the aggregation of dermatology practices, the aggregation of Ophthalmology practices of physicians, and for the last 15 years dentistry, is kind of the, it’s the star right now. It’s what private equity wants and what private equity is. Private equity is actually a fund that is put together for investing. So let’s say a company says, goes out and finds investors. And these are, these are not people wanting to invest, you know, 50,000 or 100,000. These are families and groups that are interested in investing hundreds of millions of dollars and so they put this together, and they do it in a way that allows these people to have a fixed contract meaning it is a closed-end contract. I’m going to invest X amount of dollars with you. I’m going to put in, I’m going to put in 20 million. They find a lot of people that want to invest that 20 million and that becomes their fund. Now that fund has a life span. That lifespan is five to seven years usually, and it has a guaranteed return. So what the group does, that is forming this private equity, and there are huge private equity groups that have, you know, hundreds of billions of dollars as a part of it. And they get more investors because they’ve had a great track record of doing great things. The KKRs, the AKKRs, which I saw compassionate finance to two years ago. They have a huge track record of, of returns, I’m getting returns of 8% 9% 10%. And that’s what they’re looking for is that seven to 10, maybe even 12% return for the investors.

Dr. Bruce Baird 5:40
Now, what they want is the opportunity to get a 3x or 4x. So what I’m saying is, if they invested $100 million, over a five-year period, what they’d like to do is get back a return of 100 million, let’s say 350 million, or 400 million, this is what they do. So they’re looking for cash-producing businesses that have profit that have EBITA, and they go straight to doing this investing, but being a closed fund, what I want you to understand is, and it can be confusing, but you know, let’s say it’s a five-year closed fund or a seven-year closed fund, they pay that person, that investor, here is 10%. So if it’s 100 million, here’s 10 million, and they do they pay them that 10 million every year, for five years and at the end of that five years, if it’s a five-year close and contract, they get their money back. So here’s your 100 million, and here’s your 50 million for a 10% return, but in order to do that, they have to liquidate whatever it is that they’ve purchased. That’s what then comes into word the closed-end fund. So they invest at five years, well, what do they do at five years? How do they how do they? How does it change? What do they have to do? Well, what they have to do is they have to find another private equity firm, usually a larger group. So there’s all different sizes of private equity, and they’ll find a larger group that will come in and buy them out. So they leave the investment and now there’s a new investment. I know with Heartland, they had a certain group of investors, and then that changed to the Canadian Teachers Association, and then that changed to KKR. In other words, the big boys start to get involved, and I know BlackRock, one of the largest private equity groups in the country, they have just gotten involved in dentistry. You know, so they’re starting to invest in dentistry, and they’re the largest in the world, but one of the questions and when we start talking about private equity, and DSOs, or forming a DSO, my question has always been, “Well, what happens and we know consolidation is going to go on for, gosh, seven more years, eight, nine, 10?” You know, nobody knows for sure. But when the market gets to the 65-70 %, like we’ve talked in the past, that’s when private equity is not as it’s not as good an investment for the private equity groups. So what do they do at the end of this seven or eight-year cycle? If in fact, you know, we’re doing five-year closed-end agreements, and that’s something I’ve done a lot, a lot of research, ask lots of questions and what will happen when you get to the point of full consolidation in the marketplace? What happens to the private equity groups? And I’m going to use the term that gets left holding the bag. Well, that’s one way of thinking, but the truth is, they’re not really holding the bag. I mean, like they’re not going to be able to do anything with it. What we’re going to see and, this is my prediction and take it for what it’s worth, but my prediction is we’re gonna see a consolidation of the consolidators, and I think that that’s pretty well what you’re gonna see, how five to seven major groups, you know, I would assume that The Heartland will be there, Aspen, you know, there’s are some that are so large, and they’re going to start buying up other DSOs in the marketplace,and that will be the first step and then you know, you’re going to start seeing the possibility of them giving a return because they have cash coming in, they own these practices. They have cash coming in, and they would love to leverage that. We say insurance companies with other groups that are looking for return, it’s going to go to more asset base, just straight returns are not going to try to keep flipping and making this because there won’t be anybody to flip it to, you know, to make that 5x ,4x return, but they still have a great product, they still have these dental offices that are still producing. So when I look at it, I go, “Okay, I understand that.” The other thing that they might do, or they will do is, that’s when you’ll see two or three of these groups, these large groups go public, and that’s where you see them getting returns, you know, 30x times, you know, 30 times they’re, they’re EBITA. And so that’s the scenario, but what does that have to do with dentists? What does that have to do with a dentist selling to a DSO? And I’ve told you guys we’re doing a group, all of our PDA Doc’s, we’re bringing our PDA Doc’s together. And we’re presenting that straight to private equity. We currently have cash, we’re closing in on 40 offices that are interested with a total EBITA of 25 million to 25 million plus, and these offices have not committed 100% yet. We’re going through the process of building the platform, but they’ve shown an interest and they we’ll be signing an LOI here probably in the next three weeks, that says, “Yes, I’m interested.” Well, there is no obligation that they have to sell until we go out and find the right private equity group, and the right private equity group is going to be somebody who is already been in the game, or who wants to get in the game of dentistry, and find great returns. These practices that have been a part of the Productive Dentist Academy, they’re unicorns, they have EBITA as of 25% of their total collections. So these are, these are top producing and top profitable type practices, and we’re aggregating them, and we’re also including coaching with it. So our coaching clients at PDA grow, on average, about 13%, year over year. So we’re going to bake in coaching with that, we’re going to continue to grow that business and continuing to add PDA Docs to this as they determined, yes, they want to do that. I told you last time, why on earth would you sell a practice when you’re 41 years old, and now I understand that much better. The reason I understand it better is because you’re taking cash off the table, and people say, “Well, why would I want to do that?” Don’t confuse, don’t confuse cash and ownership. You know, if you’re able to do whatever it is you want to do, meaning, no one’s going to tell you how to do your dentistry, no one’s going to force you to do more crowns or less crowns, no one’s going to change your supplies, no one’s going to change your lab. What they’re going to do is, they may negotiate with that lab and get better pricing, they may aggregate your accounting services, they may do these things to save money, but that money goes to the bottom line, which is good for private equity. It’s also good for the doctor that owns portion of his practice. So having said that, that’s the deal that we’re doing, we’re putting it together so that doctors have options. You’re still going to be an independent practitioner. So what happens if you sell 60% of your business and you roll 40%, meaning a joint venture with this DSO? Well, you know, you still earn 40%. You get 40% of the distributions of profit.

Dr. Bruce Baird 14:02
Again, why would why would private equity want to mess with offices that are doing phenomenal? And I bring that up, because you see people out there saying, “Oh, yeah, just sign up and bring your office and pay us money for the evaluation.” I talked about that last time. “Pay us money.” No, that’s BS, don’t, don’t pay anybody money to do an evaluation, because there’s plenty of people out there that will do it at no charge. Now, it has to be kind of an independent situation where you can get an evaluation of your EBITA, but doing it from a third-party standpoint, not from the DSO, they’re spying on you. Why? Because they’re going to control what your EBITA is, and that’s going to tell you a lot about what your overall value is. So what we’re doing at PDA is we’re using an independent group that evaluates all of our offices and gives everybody that EBITA on the same playing field, on the same deal, and I, and that, to me is extremely important. So we’re going to continue to talk here, and I know, you know, I like doing these podcasts 12 to 15 minutes long so that you can hear it on the way to work or whatever, but what happens to the dentist? And I’m going to talk about this next on the next podcast we do about what is the dentist do and how do they make money through the process of working through a DSO, and what the DSO is. If they’re leaving you alone and letting you do the things that you want to do, which truthfully is the PDA practices. They don’t mess with us, Heartland never mess with me after I sold to Heartland 12 years ago. Why? Because we were productive, we were we were putting out tons of revenue. So those are the things that we look at, and we’ll talk about that on the next podcast. So no, I hope, I hope that the discussion of private equity was helpful. I see. I get lots of questions about it on an ongoing basis. So I look forward to the next podcast and to talk a little bit more about what is the dentists see and how does that work for them. Talk to you guys next time and appreciate your votes for top podcast and tell your friends.

Dr. Bruce Baird 16:20
Thank you for joining me for this episode of the Productive Dentist Podcast. If you found this episode helpful, make sure you subscribe, pass it along to a friend. Give us a like on iTunes and Spotify or drop me an email at podcast@productivedentist.com don’t forget to check out other podcasts from the Productive Dentist Academy of productivedentistspodcast.com Join me again next week for another episode of the Productive Dentist Podcast

Have a great experience with PDA recently?

Leave a Review

Need help?
Accessibility Options
Accessibility On Our Website

We are committed to continuously improving access to our goods and services by individuals with disabilities. If you are unable to use any aspect of this website because of a disability, please call (800) 757-6077 and we will provide you with prompt personalized assistance.

If you have trouble seeing web pages, the US Social Security Administration offers these tips for optimizing your computer and browser to improve your online experience.

If you are looking for mouse and keyboard alternatives, speech recognition software such as Dragon Naturally Speaking may help you navigate web pages and online services. This software allows the user to move focus around a web page or application screen through voice controls.

If you are deaf or hard of hearing, there are several accessibility features available to you.

Closed Captioning
Closed captioning provides a transcript for the audio track of a video presentation that is synchronized with the video and audio tracks. Captions are generally visually displayed over the video, which benefits people who are deaf and hard of hearing, and anyone who cannot hear the audio due to noisy environments. Most of our website’s video content includes automated captions. Learn how to turn captioning on and off in YouTube.

Volume Controls
Your computer, tablet, or mobile device has volume control features. Each video and audio service has its own additional volume controls. Try adjusting both your device’s volume controls and your media players’ volume controls to optimize your listening experience.

Read More About Accessibility and Why It Matters

Need help?

Oops! We could not locate your form.

Do not include sensitive personal, financial, or other confidential information (Social Security, account number, login, passwords, etc.). This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Helpful Resources

Below are links you may find helpful when scheduling an appointment with us.


Episode 213 – Requested Replay: The Waiting is the Hardest Part

“You’re not doing your patients any favors because their...

Episode 213 – Requested Replay: The Waiting is the Hardest Part (featured image)

Episode 239 – From Good to Great

“I’ve found ways to become free.” ~Dr. Chad Johnson Discover...

Episode 239 – From Good to Great (featured image)

Episode 116 – Requested Replay: Creating Patient Connections

In this episode of the Investment Grade Practices podcast, we invite...

Episode 116 – Requested Replay: Creating Patient Connections (featured image)
In the Press

I’ve Arrived: From $100 in the Bank to Generational Wealth in Less Than 3 Years.

from Dental Entrepreneur – Winter 2023 By Dr. Maggie Augustyn...

I’ve Arrived: From $100 in the Bank to Generational Wealth in Less Than 3 Years. (featured image)
From Our Blog

Free Case Study PDF: Results That Speak For Themselves

Dentistry is tough–you deserve support. But hiring a consultant can...

Free Case Study PDF: Results That Speak For Themselves (featured image)
Follow Us On Social Media


Stay informed on updates and upcoming events from our office.


Connect and learn more about Productive Dentist Academy.


Subscribe to our YouTube channel.


View fun photos and follow our team on Instagram.

Your Privacy
Privacy Policy

This privacy notice discloses our privacy practices and the use of Google Analytics 4(GA4), an analytic advertising feature. This privacy notice applies solely to information collected by this website and the GA4 platform. It will notify you of the following:

  1. What personally identifiable information is collected from you through the website and GA4 platform, how it is used, and with whom it may be shared.
  2. The choices available to you regarding the use of your data.
  3. The security procedures in place to protect the misuse of your information.
  4. How you can correct any inaccuracies in the information.

Information Collection, Use, and Sharing

We only have access to/collect information that you voluntarily give us via email or other direct contact from you. We will not sell or rent this information to anyone.

We will use your information to respond to you, regarding the reason you contacted us. Unless you ask us not to, we may contact you via email in the future to tell you about specials, new products or services, or changes to this privacy policy.

While Productive Dentist Academy is the primary data controller, Google, in the context of providing Google Analytics service, acts as a data processor. We use Google Analytics 4, a widely recognized web analytics service provided by Google, Inc., to track user interactions and gather data for advertising purposes. As a third-party vendor, Google Analytics operates independently and maintains its own privacy policy, which can be found at https://policies.google.com/privacy. We carefully select our third-party vendors for their commitment to user privacy and adherence to data protection standards. As part of our ongoing commitment to your privacy, we implement measures to ensure that services like GA4 comply with our high standards of data protection.

GA4 collects certain personally identifiable information from you as you interact with our website. This information includes but is not limited to your device ID, IP address, and geographic location. The information collected through GA4 is used to analyze user behavior, optimize our website’s performance, and tailor our content to better serve your needs. This data is compiled and anonymized, ensuring that it cannot be linked back to individual users.

Please note that GA4 may share the information collected with Google and other third-party service providers to enable data processing and reporting on website usage. However, we will not sell, rent, or share your information, especially your personally identifiable information, with any third party outside of our organization.

Your Access to and Control Over Information

You have certain rights regarding the data collected by GA4. You have the right to do the following at any time by contacting us via the email address or phone number given on our website:

  • See what data we have about you, if any.
  • Have us delete any data we have about you.
  • Express any concern you have about our use of your data.

In addition to opting out of any future communications from us at any time, you may also opt out of the GA4 feature if you so choose. You can opt out of the GA4 Advertising Features we use through Ads Settings, Ad Settings for mobile apps, or through the NAI’s. This link points to Google Analytics’ currently available opt-outs for the web https://tools.google.com/dlpage/gaoptout/ 


We take precautions to protect your information. When you submit sensitive information via the website, your information is protected both online and offline. GA4 also follows industry best practices to protect your data both online and offline.

To ensure data protection while we are using GA4, we are implementing additional security measures that include and are not limited to:

  • limiting data access, 
  • using secure protocols, 
  • managing data sharing with Google

Wherever we collect sensitive information (such as credit card data), that information is encrypted and transmitted to us in a secure way. You can verify this by looking for a lock icon in the address bar and looking for “https” at the beginning of the address of the Web page.

While we use encryption to protect sensitive information transmitted online, we also protect your information offline. Only employees who need the information to perform a specific job (for example, billing or customer service) are granted access to personally identifiable information. The computers/servers in which we store personally identifiable information are kept in a secure environment.

Contact Us

If you have any concerns about the use of GA4 or believe that we are not abiding by this privacy policy, please contact us immediately. We are committed to addressing any privacy-related issues promptly and transparently.

By using our website and consenting to the use of GA4, you acknowledge and agree to the data collection and processing practices described in this notice. For more information about GA4 and its privacy practices, please review Google’s Privacy Policy on this link https://policies.google.com/privacy.

If you feel that we are not abiding by this privacy policy, you should contact us immediately.

Read More About Our Privacy Policy and Why It Matters

Terms of Service
Terms of Service

Entering this site or the links accessible through this site, you agree to be bound by this agreement. The information and the resources contained on and accessible through this site are made available by Productive Dentist Academy and/or its suppliers and vendors, and are subject to your agreement to their terms and conditions.

All contents copyright (c) Productive Dentist Academy

All rights reserved, Productive Dentist Academy makes this website available to all users for the sole purpose of providing educational information on health-related issues.

The accuracy of website, information, and resources identified are not warranted or guaranteed, or intended to be a substitute for professional health advice, to contradict health advice given, or for health care of any kind.

Your use of this website indicates your agreement to be bound by the Terms of Use and you expressly agree to be bound to the foregoing terms and conditions.

All materials on this website, including the site’s design, layout, and organization, are owned and copyrighted by Productive Dentist Academy, or its suppliers or vendors, and are protected by U.S. and international copyrights.

Material on this site may be used for personal use only. Commercial use of any sort is strictly prohibited.

Use of Resources & Information
This site may not be used as a supplement or alternative for health care, and is not intended and does not warrant or guarantee the quality or quantity of any services of any of the advertisers identified; further, the information provided is merely for educational purposes, and its accuracy is not guaranteed. Do not use this site as a substitute for health care. Please consult with your doctor or other health care provider regarding any health questions you may have. This site may not be used for health diagnosis or treatment. Do not use this site to disregard any health advice, nor to delay seeking health advice, because of something you read or see in this site.

You understand and agree that neither Productive Dentist Academy nor its suppliers or vendors or linked domain names are responsible or liable for any claim, loss, or damage of any kind, directly or indirectly resulting from your use of this site or the information or the resources contained on or accessible through it.

Productive Dentist Academy expressly disclaims any implied warranty or representation about the information or accuracy, relevance, completeness, timeliness or appropriateness for any particular purpose of any kind. Your use of this site is also subject to all additional disclaimers that may appear throughout the site.

Other Internet Sites Links
This site also includes links to other internet sites created and maintained by Productive Dentist Academy’s suppliers, vendors, affiliates, or subscribers. Be aware that Productive Dentist Academy does not control, makes no guarantees about, and disclaims any express or implied representations or warranties about the accuracy, relevance, completeness, timeliness or appropriateness for a particular purpose of the information or the resources contained on these or any other internet sites.

Further, the inclusion of these links is merely for your convenience and is not intended and does not reflect Productive Dentist Academy’s opinion on the accuracy or the importance of these other sites; further, Productive Dentist Academy does not endorse in any manner any of the views expressed in, or products or services offered by these other sites. All information in any site by Productive Dentist Academy, or associated or linked site, is extracted, read, used, or relied upon by you at your own risk.

Disclaimer of Warranty
Productive Dentist Academy and its suppliers and vendors disclaim all express or implied representations or warranties regarding the information, services, products, materials, and any other resources contained on or accessible through this site, including without limitation any implied warranties of merchantability or fitness for a particular purpose. All information provided by Productive Dentist Academy is made available “as is” and “as available” without warranty of any kind, or any express or implied promise, including, by way of example, its continuing availability.

Limitation of Liability
With respect to products, goods, or services purchased from any entity identified, listed, named or contacted through Productive Dentist Academy’s website, or any links to Productive Dentist Academy’s website, to the maximum extent permitted by applicable law, in no event shall Productive Dentist Academy or its suppliers or vendors be liable for any direct, indirect, special, punitive, incidental, exemplary, contractual, or consequential damages, or any damages whatsoever of any kind, resulting from any loss, which by way of example, includes loss of use, loss of data, loss of profits, business interruption, litigation, or any other pecuniary loss, whether based on breach of contract, tort (including negligence), product liability, or otherwise, arising out of or in any way connected with the use or performance of this site, with the delay or inability to use this site, or with the provision of or failure to make available any information, services, products, materials, or other resources contained on or accessible through this site, even if advised of the possibility of such damages.

You acknowledge and agree that the limitations set forth above are elements of this agreement, and that this site would not be provided to you absent such limitations.

You agree to indemnify, defend, and hold harmless Productive Dentist Academy and its suppliers and vendors from any liability, loss, claim, and expense (including reasonable attorneys’ fees) related to your violation of this agreement or use of this site in any manner. Your use of this site shall constitute your acceptance of the terms of this Agreement, as revised and modified, if any, each time you access this site. Productive Dentist Academy may modify this agreement at any time, and such modifications shall be effective immediately upon posting of the modified agreement.

Productive Dentist Academy’s failure to insist upon strict enforcement of any provision(s) of this agreement shall not be construed as a waiver of any provision or right.

This agreement and the resolution of any dispute related to this agreement or this site shall be governed by and construed in accordance with the laws of the State of Washington, without giving effect to any principles or conflicts of law. Any legal action or proceeding between Productive Dentist Academy or its links, suppliers or vendors and you related to this agreement or this site shall be brought exclusively in a state or federal court of competent jurisdiction sitting in Skagit County, Washington.

All materials on this website, including the site’s design, layout, and organization, are owned and copyrighted by Productive Dentist Academy or its suppliers or vendors, and are protected by U.S. and international copyrights.

This site contains links to other sites. Productive Dentist Academy is not responsible for the privacy practices of other sites that are linked to us.

Should you have any questions or concerns regarding Productive Dentist Academy’s Privacy Policy and Terms of Use, please contact us.

Read More About Our Terms of Service and Why It Matters

Search the Website

Use keywords in the search box below to find what you're looking for.

Go to the Top of the Page