Dental Directory sees Exponent, Equistone bare teeth in sale second round

Josh O'Neill and Rachel Lewis
07 April 2022

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Buyout groups Exponent and Equistone are among suitors to have progressed to a second round of bidding for Dental Directory, the UK-based dental products and equipment supplier being carved out of IDH Group, two sources familiar with the situation said.

Sellside advisor DC Advisory is expected to review second-round bids around a month from now after collecting non-binding offers on 23 March, one of the sources added.

The asset is being marketed off a run-rate EBITDA of GBP 15m, as reported by Mergermarket. Palamon Capital Partners, the owner of IDH Group, launched an auction of Dental Directory in February, as reported.

Dental Directory operates at narrow, single-digit EBITDA margins of approximately 6%, as reported. One of its key peers, Henry Schein, on the other hand, operates on a 9% EBITDA margin as reported, although it is far larger than Dental Directory, generating annual EBITDA of around USD 1bn.

Dental Directory has also experienced downward pressure on its gross margins, as reported.

Moreover, questions may arise over the extent to which topline growth can be sustained post-COVID-19, given that a sudden uptick in sales of personal protective equipment (PPE), which Dental Directory also provides, was spurred by the pandemic, as reported.

Nevertheless, Dental Directory has the potential to improve its performance as a standalone business independent of IDH Group, which operates one of the UK's largest dental chains, Mydentist, as reported. In addition, Dental Directory has captured approximately 25% of the UK market, as reported.

IDH Group acquired Dental Directory in 2014 for an undisclosed sum.

Dental Directory is one of the UK's largest full-service dental dealers, serving around 12,000 practices nationwide, according to its website. Palamon, formerly a minority investor in IDH Group, acquired its majority stake in the vendor from Carlyle last year.

Equistone declined to comment. Exponent, Palamon and DC Advisory did not respond to requests for comment.