Quad-C Exits Dental Deal With a Smile

The Virginia-based firm exited the dental support organization after only three years, in a sponsor-to-sponsor sale.

Quad-C Management, a Charlottesville, Virginia–based private equity firm, is grinning ear to ear this summer thanks to its recent exit of Dental Care Alliance (DCA) after only three years of ownership. DCA is one of the United States’ largest multibranded dental support organizations.

Terms of the deal—closed on July 2—were not revealed by Quad-C partner Frank Winslow. But he does admit that DCA’s performance exceeded expectations, which helped persuade managers at the private equity firm to sell the business to New York-based Harvest Partners in a sponsor-to-sponsor transaction.

“Harvest knew [DCA] was performing well,” Winslow says.

DCA was in good shape when Quad-C acquired the company, Winslow says, but the firm worked quickly to improve operations. That included increasing the business’s affiliates, improving compliance, and enhancing back-office functions, such as doubling the size of the call center. DCA also experienced significant organic growth.

The dental support company was founded in 1991 and is based in Sarasota, Fla., with operations in eight states serving 157 affiliated dental offices. DCA provides a suite of back-office support to it affiliates, including human resources and marketing, purchasing, accounting, and insurance management, as well as general dentistry, hygiene, pediatric dentistry, orthodontics, endodontics, periodontics, and oral surgery. The company’s business is focused in the Midwest, Mid-Atlantic, and Southeastern regions of the U.S.

The dental industry is a favorite of many private equity investors. Winslow says it is a $100B market that is highly fragmented and offers limited reimbursement risk because it is a healthcare-insurance-light business. Not surprisingly, Quad-C had its eyes on the sector for a number of years.

The firm had a clear view of where to take DCA, Winslow says. Research told managers that dentists of affiliated organizations were more interested in focusing on the clinical side of the business than on the back-office and infrastructure aspects of running a practice.

When Quad-C acquired DCA in May 2012, the private equity firm backed the entire existing management team, including the company’s CEO, Mitch Olan, and its CFO, Dave Nichols. DCA’s leadership was clearly focused on supporting its dentists, Winslow says. As a result, the already successful business’s culture remained intact following the acquisition and supported Quad-C’s plans for expansion and forming a partnership.

“Management really embraced that perception,” explains Winslow. He says that today it is a “bigger and better company.”

That strategy paid off for both Quad-C and DCA, which saw revenues nearly double during the private equity firm’s tenure of ownership. That is enough to make any investor smile.