While there are a few signs pointing to more positive economic conditions to support DSO growth, interest rates are keeping one executive from getting too excited.
Hackensack, N.J.-based Max Surgical Specialty Management recently hired Brian Lawson to be its senior vice president of business development. Mr. Lawson has an extensive background in multi-site healthcare, including serving as the chief development officer at SALT Dental Collective and serving in leadership roles at Covenant Physician Partners and SAGE Veterinary Centers.
Mr. Lawson recently spoke with Becker's to discuss his outlook for the economy and what the future might hold for DSO activity.
Editor's note: Responses were lightly edited for length and clarity.
Question: Are you feeling optimistic about how the economy will impact DSO activity in the near future?
BL: I'd say I'm cautiously optimistic. I think there are some good, promising signs in terms of the overall macro economy that should continue to support the growth of the economy and certainly the dental industry over the near term. I think the one uncertain piece is, what do interest rates do? So much of the growth in this industry over the last five plus years has been driven by very cheap debt that was easy to obtain and provided a funding source to continue to grow with new partners via M&A. Ever since interest rates have been high, there have been fewer DSOs that have gone out to market to enter recapitalization transactions, and so I'm curious to see what that looks like over the next few years. Even if the economy continues to improve, if interest rates continue to stay roughly around where they are, it changes the calculus in terms of what investors thought their investment could achieve, and therefore may impact some decisions in terms of what DSOs do in terms of going back out to market, finding a new strategic investor, or just continuing the status quo for the foreseeable future.