Smile Brands narrows auction to a handful of suitors, sources say

27 November 2019

The auction for Gryphon Investors-backed Smile Brands, a major West Coast dental practice management group, has narrowed down to a few potential buyers in the second round of its sale process, according to four sources familiar with the matter.

Private equity firms Apax Partners and TSG Consumer Partners appear to be the most active in vying for Irvine, California-based Smile, though Advent International and Harvest Partners, which owns Dental Care Alliance, are still around the process, three of the sources said.

Smile Brands, which according to its website manages over 425 affiliated dental offices in 17 states, generates around USD 70m of EBITDA, the sources said. It has been a portfolio company of Gryphon Investors since 2016, when it bought the company from Welsh, Carson, Anderson & Stowe (WCAS) for an undisclosed price. Buyouts first reported that Gryphon was looking to sell Smile in October in a process led by Moelis.

San Francisco-based Gryphon previously owned Smile predecessor company Bright Now! Dental from 1998 until 2005, but repurchased the company in 2016 and revived it under the leadership of co-founder Steve Bilt, who had left the company when it was held by WCAS.

The company was founded in 1998 by a management team that included Bilt and CFO Brad Schmidt and has grown rapidly both organically and through acquisitions, particularly after Gryphon repurchased the firm. The company has made at least eight acquisitions of dental practices since Gryphon’s investment, according to Mergermarket data.

A sale of Smile would come amid a robust market for dental practice assets amid a general consolidation of professional healthcare services groups across a wide spectrum of specialties.

ABRY and Riverside sold North American Dental Group (NADG) to Swiss family office Jacobs Holding earlier this year for approximately 13x adjusted EBITDA of USD 52m, this news service reported. Additionally, New Mountain Capital-backed Western Dental & Orthodontics recently relaunched its sale process alongside Goldman Sachs and Deutsche BankMergermarket reported.

Smile, Advent, and Harvest Partners did not respond to requests for comment. TSG, Apax, Gryphon and Moelis declined to comment.