The Macroeconomic Shift and Its Impact on the DSO M&A (Mergers & Acquisitions) Space | Ep. 12

"The era of buying your way to profitability is over. Welcome to the new reality of the DSO space."  In this episode of Beyond The Operatory by Dental City, host John Stamper welcomes back Brian Colao, Director of the DSO Industry Group at Dykema, to dissect the macroeconomic forces that have reshaped the dental industry.  From the "Great Resignation" and soaring inflation to the interest rate spikes that triggered an M&A drought, Brian breaks down how these changes have forced the industry into an "unnatural state." With the days of cheap capital and hyper-inflated valuations behind us, Brian discusses how this affects Private Equity, the reality of delayed recapitalizations, and why the "Costco model" of deep operational understanding is the only way forward for dental organizations.  In this episode, we cover: Chapters 00:00:00 The Macroeconomic Shift and Its Impact on the DSO M&A (Mergers & Acquisitions) Space 00:04:40 The Year of "What Didn't Happen": Why the expected M&A recovery of 2025 stalled out due to stubborn interest rates and inflation. 00:08:45 The M&A Drought & Future Outlook: Why the market saw a massive slowdown in transactions and why Brian predicts a slow, steady recovery through 2028. 00:11:05 The "Dry Powder" Reality: Why Private Equity won't just blindly pour unprecedented capital into dentistry anymore. 00:13:25 Dentistry's "Unnatural State": Why the inability to pass rising costs onto patients (unlike a plumber or electrician) makes innovation the only true equalizer. 00:16:45 The "Recap" Crunch: The tension building between dentists waiting for their second equity event and PE groups desperate to recycle their funds. 00:21:10 The New Normal for Multiples: Why the days of 15x-16x multiples are over and what solo practices and groups can realistically expect today. About the Guest: Brian Colao is the [SS1] (#_msocom_1) Director of the DSO Industry Group at Dykema. He is widely regarded as one of the foremost authorities on dental support organizations (DSOs) and has served as counsel to hundreds of dental organizations nationwide. Brian is also the architect behind the annual Dykema DSO Conference, the largest and most influential event in the DSO industry.