Topspin Partners LBO, a lower mid-market buyout shop, has made a substantial investment in Brighter Dental Care, a chain of dental practices in New Jersey, Buyouts reported earlier, citing firm Managing Director Leigh Randall .
The company’s seven practices perform general dental, periodontic, orthodontic, endodontic and oral surgery procedures, and employs a business model in which the patient spends more time with the dentist early on than is customary at a typical practice in order to plan long-term care, Randall said. The company’s enterprise value is between $10 million and $50 million, he said.
“It’s very much a ‘Let’s see what the state of your oral health is,’” Randall said. “It’s not just about a getting a dental cleaning.”
Roslyn Heights, N.Y.-based Topspin typically invests $5 million to $15 million of equity in its deals, and is about 60 percent invested in its debut buyout fund, a $132 million vehicle it raised in 2007.
AUA Private Equity Partners LLC, another New York-based private equity firm, introduced the Topspin team to the deal and co-invested. The owner-operators of the company, brothers Todd and Scott Singer, retained large equity stakes in the company.
Beyond the company’s business model, Topspin was drawn to some trends favoring the dental practice industry. Estimated expenditures for dental care grew at a compound annual rate of approximately 7 percent from 1998 to 2008, and are expected to grow at a rate of approximately 6 percent over the following decade and reach $180 billion by 2019, according to the Centers for Medicare & Medicaid Services.
“There’s a growing awareness of the importance of dental health, that the mouth is a window into health,” Randall said, mentioning research suggesting links between gum disease and more serious, non-dental conditions such as diabetes and heart disease.
Brighter Dental Care plans to expand its business with Topspin’s support by opening new practice locations, Randall said.
Dental practices have a been a fairly popular target for private equity firms in recent years. Other investors in the sector have included Catterton Partners, Friedman Fleischer & Lowe LLC, Freeman Spogli & Co. and DFW Capital Partners.
Though Topspin doesn’t generally invest in health care—it has invested in a medical device company that serves the veterinary market—its executives are comfortable with the dentist practice model because it has a less cumbersome regulatory burden than many health care sectors, Randall said. “We felt like dental care is a unique sub-sector of health care that we could really get our arms around.”
(CORRECTION: Topspin Partners LBO typically invests $5 million to $15 million in its deals. An earlier version of the story said it typically invested $5 to $15 million.)
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