H2’22 Status Quo in M&A
FY22 continues to be a year of surprises and disappointments. The geo-political situation in Eastern Europe shows only little signs of improvement, and while the COVID-19 lockdown in Mainland China may have come to an end, nevertheless the global supply chain shortages continue to negatively impact the global economy. What makes the situation even worse is the double blade of global inflationary pressure and subsequent quarters of negative growth – signing the onset of economic slowdown (if not recession).
At a time when the Chinese economy doesn’t represent the global engine for growth, the Hong Kong based CareCapital Holdings has increased its appetite for overseas investments (outside CN) – keeping its focus on digital dentistry and clear aligner categories.
In H1’22 alone, CareCapital Holdings successfully closed a series of deals in Europe and North America. The largest of all these transactions continues to be Barcelona-based orthodontics focused DSO Impress (Smile2Impress). The Spanish DSO was recently in the news again for raising its Series-B financing round in the scale of USD 120-125 M, given certain milestones are met NTM.
In the face of economic slowdown when US healthcare services segment growth on QoQ basis remains flat, and Mainland China’s sequential growth continues on negative basis, Private Equity groups are increasingly looking at cross-border deals. insightsZ estimates that up to 35 percent of all the deals done in H1’22 were cross-border in nature. Not just that, up to 27 percent of the deals were executed to enter new markets and improve operational efficiency.
As the global economic growth has remained sluggish for the better part of the year, M&A activity has reached record levels as companies continue to look out for inorganic growth – and turbocharge their revenue.
Impress X Uniform Teeth
Given the unfavorable macroeconomic environment and the uphill regulatory framework concerning consolidation in major EU countries, US presented an attractive proposition for the Spanish DSO brand to thrive and continue its growth momentum.
Of course, the country’s dental healthcare services market dynamics may not be a walk in the park, but nevertheless DSOs represent less than 20 percent of all the dental offices across US – in other words, their market is still largely fragmented and presents a significant opportunity for consolidation & improvement of operational efficiencies. Leveraging on a strong knowhow and expertise, Impress is already very active in Europe – having built a robust business and scaled to +130 locations in the last 40 months.
The joint venture with Uniform Teeth will enable Impress to enter the US market, share its R&D as well as operational know-how and possibly scale the business – benchmarking its speed and efficiency against its peer group (incl. Smile Dental among others).