It’s been a big year for mergers and acquisitions in the Physician Medical Group sector. Deal volume slowed a bit in the third quarter of 2018 compared with the previous quarter, but with two quarters of 60-plus deals, it looks like 2018 will be a record-setting year in this sector, in the 21st century, at least.
Dental practices make up just 12% of the targets through late October, with 24 deals made public. (By comparison, dermatology practices are one of the hottest practice areas this year, with 40-plus deals on the books.)
Most of the dental targets are standalone practices with one or two dentists. Prices aren’t usually disclosed for smaller practices, especially when the acquirer is a private equity firm or a company sponsored by one.
So it was interesting to see the announcement that Birner Dental Management Services (OTCQX: BDMS) was being acquired by Mid-Atlantic Dental Partners, a portfolio company of S.C. Goldman & Company, LLC for approximately $19.9 million.
Birner Dental operates dental practice affiliates under the Perfect Teeth brand in Colorado, Arizona and New Mexico. It has more than 100 dentists.
The acquirer is a dental support organization that provides marketing, financial, practice information and other business services. Over the last two years, it has built an exceptional management team with deep dental, operational, and entrepreneurial experience.
BDMS shareholders were eligible to receive total cash consideration of up to $10.75 per share, representing a 105% premium to the company’s closing share price of $5.25 on October 2, 2018. Shareholders will receive one Contingent Value Right (CVR) per share of Birner common stock. That makes for 0.3x revenue but 51.2x EBITDA. Pretty rich. But then, this acquisition is expected to increase Mid-Atlantic Dental affiliate offices projected annual revenues to more than $100 million.
Birner will become Rocky Mountain Dental Services Holdings, a wholly-owned subsidiary of Mid-Atlantic Dental Services Holdings, at closing of the transaction. Birner will continue to be based in Denver, Colorado and will continue to do business under the Perfect Teeth brand.
