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Private Equity

TSG Makes Recession Play in Specialty Dental

Published: October 28th, 2022
TSG Consumer Partners managing director Colin Welch tells The Deal what drew the firm to the Nashville-based dental support organization, where it sees room to run inorganically.

Private equity firm TSG Consumer Partners LLC is making its second step into the healthcare services space with an investment in a business that it views as recession-resistant, Colin Welch, managing director and head of TSG’s New York and London offices, told The Deal recently.

In mid-September, the firm purchased an undisclosed stake in dental support organization Specialty Dental Brands, or SDB, from Leon Capital Group. Leon Capital, the company’s management team and its doctor partners will remain SDB investors.

Welch said a major draw for the firm was the company’s diversified business mix, which should allow it to hold up well if consumers begin to cut discretionary spending.

TSG Consumer Partners looked at a number of dental practices and was drawn to SDB due to its mix of specialties, Welch said. The total addressable market for businesses that offer pediatric dental, orthodontic and oral surgery services is about $35 billion, he said.

As TSG researched the dental sector, the firm came across data from the 2009 to 2010 recession that suggest a “very modest downturn” in dental visits, Welch said.

For some procedures in the youth population, there’s a suggested age range, particularly orthodontics and wisdom tooth removal, he noted. Parents typically do not forgo or delay these procedures for their children, he said.

And as SDB serves patients starting from early childhood through the teenage years, “it’s a more sticky patient relationship,” Welch added.

Nashville-based SDB provides IT, human resources, marketing and other services to oral surgery, pediatric dentistry and orthodontic practices. It supports more than 211 dental practices across 20 states.

Editor’s note: The original, full version of this article was published on Oct. 19, 2022, on The Deal’s premium subscription website. For access, log in to or use the form below to request a free trial.

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