dentalcorp (DNTL) ran over 30% on its announced $2.2B take-private transaction led by private equity group GTCR. At $11 per share, the deal prices DNTL at over 10x NTM EBITDA - well in excess of its last two years of trading…
… but materially lower than its $14 IPO price in 2021 and secondary offering at $16.30 the following year.
It’s not all that surprising to see Canada’s largest dental network go here, given recent management commentary…
What hasn’t worked out is valuation, but that’s frankly not something that we can control… The private market obviously has a lot more experience and a lot more tenure with businesses like ours.
… and its shift from aggressive M&A fueled growth…
… to leverage reduction.
In private hands, DNTL will trim fat to capture the benefits of scale public markets helped build - but it may not be the last time we see these assets. Returns look skinny in the pure-play dental roll-up model…
… but they could be improved as part of a broader health platform. Given GTCR took a minority stake in Telus Health recently, it could try to facilitate a deal ahead of an IPO. Unlikely, but possible.
