This month, the Dental Lab Expert breaks down the decision to sell your laboratory, integrate into a corporate group or remain independent.
Over the last decade, we have witnessed increasing acquisition activity of dental practices into groups, and even further, the acquisition or mergers of groups into larger corporates.
With several of these groups now owning more than 100 practices, and with over 10 years of experience behind them, the success of the business model is undeniable. These large dental service organisations, or DSOs, are making it work and they are not going away.
The dental lab market in the UK has a somewhat chequered past with corporate groups and buy-outs, with a list of failures that can only be described as extensive.
Our industry has yet to see a group that successfully invests in labs and that lasts over ten years. Many of us, including myself, have some horrid experiences of these corporate groups from years ago.
Cut to this decade, and we are once again seeing record high investments in the lab industry and dental labs – so why now?
Why now?
Investment usually comes when opportunity arises from an industry going through significant change. I have spoken many times about the issues our industry is facing and yet, it’s these issues and problems that make investing in dental technology so interesting.
Dental technology is growing in sales and has a good long-term future from a demand perspective, but the numbers of both technicians and labs is plummeting. Many see this downturn as a doom and gloom prophecy that there simply will not be enough labs to manage the workflow.
Whilst this can be seen as a problem, it can also be seen as a great investment opportunity. Investments, acquisitions, and mergers of labs are, without a doubt, at a record high. We are seeing this investment ranging from new start-ups to established dental practice groups, as well as some longer standing overseas operations.
If you want to sell your lab, have someone invest in it, or even join a group for long-term planning, now is probably the best opportunity we have ever had – but is it the right decision?
The decision to sell or integrate
Many of you will know I am part of a European group of over 70 labs called Corus, but I’d be the first to say it took me three years to make that decision. I had to be sure of the benefits of this group and make my decision to join as a long-term strategy, not a short-term plan or to do with retirement.
Selling at 44 years of age and leaving the industry would be my idea of hell. The fun is just starting, why would I want to leave now? However, many lab owners are in their late 50s and 60s, and the chance to sell and retire is incredibly appealing.
So, the decision to stay or go is neither right or wrong, it simply depends on the person(s) making that decision and their situation in life.
‘Pros and cons’
This article isn’t to discuss the merits of who to sell to, but more to debate the pros and cons of selling, integrating, or remaining as an independent. We all appreciate how challenging dental technology can be and, for many people who reach retirement age, selling your lab is the cherry on the top of a hard lifelong career and ensures a good pension.
But what about lab owners like me who have a good 15 to 20 years left in this industry, or maybe have a son, daughter, or long-term employee that wants to take over the lab?
My decision to join a large group was about shared visions, values, and ideas. This was about joining a greater good, to ensure a long-term career for both my team and me, where most of the other lab owners were of the same age and mindset. The downside of that decision for many is the long-term plan, many simply don’t want that long-term plan.
Remaining independent
The last remaining question is whether to stay independent and run as a lab that truly stands alone and on its own two feet. There are benefits – individuality, control, and complete decision-making freedom are all very attractive.
Conversely, the negatives include competing with highly organised labs, some running state of the state-of-the-art software, and most with buying power that can translate into discounts.
To many, the independent lab may be the future, but like all business decisions, it comes with risk – the same risk as those making decisions to sell or merge.
‘No right or wrong answer’
There is no right or wrong answer to any of the above, it’s an industry where there is enough work for everyone, and no–one should see acquisitions or mergers as a threat. It’s just another opportunity in an evolving industry landscape, which could equally be said for remaining independent.
It’s a truly exciting time in the world of dental technology and I think the next five to 10 years will see a completely different approach to how we work and what we do. I am honestly thrilled to be part of this journey.
Whatever decision we make, the labs we own and the labs we work at will truly shape the future of the industry.
Catch up with previous columns from the Dental Lab Expert:
- Addressing resistance to health and safety
- Should we be excited about 2023 as labs? Heck yes!
- 2022: the year of ups and downs
- Can you fire a client?
- Overseas conferences and training – essential or just a jolly?
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