Dental Consolidation Winner #3: The Funders<\/strong><\/h3>\nEvery DSO platform needs financing to get started. The Funders are the ones who provide that financing.<\/span><\/p>\nLet\u2019s face it:<\/strong> dental practices aren\u2019t cheap. Virtually all of dental consolidation is fueled by debt, and in most cases, that debt comes with equity strings attached. Private equity world has been pouring billions of dollars into the dental industry and they want more than the bank on a traditional loan.<\/span><\/p>\nDSOs accepting this kind of funding include their investors at the cap table, and their original investment is able to produce equity based dividends and potentially a home run hit with a recap event.<\/span><\/p>\nIn Established DSOs, that seed money usually comes from Private Equity Investors who own 50-70% of the deal. Because these Funders own such a significant interest in the DSOs, they reap the greatest financial benefits. But in an Autonomous DSO platform, the structure exists to benefit the dentists. <\/span><\/p>\nHow can dentists be Funders without the trillions of dollars in capital Private Equity Investors have? The answer is to cut Private Equity out of the DSO platform formation process in favor of financing through a dentist-owned fund.<\/span><\/p>\nDentists can band together to create their own fund to finance the creation of an Autonomous DSO platform. By working in partnership with a DSO centric bank, dentist-owned funds can finance a DSO without giving up capital to non-dentists. The beauty of this is twofold: <\/span><\/p>\n\n- The dentist-owned fund only needs to contribute 25% of the capital needed to establish the Autonomous DSO. The DSO centric bank will contribute the rest.<\/span><\/li>\n
- The DSO centric bank will contribute to financing the Autonomous DSO without taking any equity. All the bank wants is a return in the form of interest, not ownership of the platform. That leaves a greater portion of the DSO to be owned exclusively by dentists.<\/span><\/li>\n<\/ol>\n
By participating in an Autonomous DSO as a Funder, you will be in a position to have significant equity in the deal. That means a greater slice of the pie for the lifetime of the deal.<\/span><\/p>\n
<\/p>\n
How to Win in the Dental Consolidation Era<\/strong><\/h4>\nThe dental consolidation wave is rapidly transforming dentistry as we know it, bringing new opportunities for building wealth. As a dentist, you deserve to benefit from these changing times by positioning yourself to be a Finder, a Founder, or a Funder. But which of these roles is your best path forward? <\/span><\/p>\nThe answer depends on your goals as it concerns building transformational, multigenerational wealth. No matter which path you choose, you have the potential to earn big as long as you understand the ins and outs. <\/span><\/p>\nAt Freedom Dental Partners, we\u2019re committed to helping you achieve Total Dental Freedom for your finances, your career, and your lifestyle. If you\u2019re interested in learning more about how to become a Finder, a Founder, or a Funder as a part of an Autonomous DSO, book a call with our transition specialist.<\/a><\/span><\/p>\n<\/div>\n\n\n