I’ve found it helpful for some dentists to understand WHY DSOs are growing the way they are, and more importantly, why the investors are so interested in dental businesses.

The short answer is “yield.”

The concept of yield is an important one for dental service organizations. Yield is a measure of the return on investment (ROI) that a business can expect from its investments in dental services. It is a measure of the amount of profit or revenue generated by each dollar invested in the business. A high yield indicates that the business is making more money than it is spending, while a low yield indicates that it is spending more than it is earning.

Yield can be used to evaluate how well a dental service organization is performing financially, as well as to compare different organizations and determine which ones are providing the most value for their customers. For example, if two organizations offer similar services but one has higher yields than the other, then it may be worth considering investing in that organization instead.

Yield can also be used to assess how much risk a dental service organization is taking on when investing in new services or expanding existing ones. By analyzing yield data, organizations can identify areas where they may need to adjust their strategies or invest more resources in order to maximize returns and minimize risks.

Finally, yield can help dental service organizations understand how their investments are impacting their bottom line and overall profitability. By tracking yield over time, businesses can identify trends and make adjustments accordingly to ensure they are getting the most out of their investments.

Investors love being able to place their money into something which yields them more money. A DSO represents a different option than what you might think of with an "investor" such as putting your money in stocks where you are dependent on the value of your stock increasing for your investment to increase.

A well-run dental practice produces a great margin compared to other businesses. AND, through economies of scale which DSOs are able to achieve with consolidation, a well-run DSO can entice investment which yields a huge amount of profit for all those invested.

This is investment heaven for private equity firms. You can take advantage of these investors who are hungry for secure places to put their money which will yield them more money, by finding the right DSO partnership.