Dental deal attracts $100m

With Dentistry changing so dramatically here at Collins Acquisitions it wasn’t surprising to find out David Penn secured such a great deal as reported by the Australian Financial Review today.

Sydney dentist and medical appliance innovator David Penn has sold a majority stake in his Southern Cross Dental Laboratories to private equity player Ironbridge Capital in a deal worth nearly $100 million.

Dr Penn will remain chief executive of the business he started nearly three decades ago but told The Australian Financial Review it was time to bring in a partner to help take the company to its next stage of growth. “This has not been an overnight success; it’s been a lot of hard work,” he said “On my experience and expertise on a corporate level, I think I have reached my zenith.”We are growing nicely and there are some incredible opportunities. The biggest challenge of all has been managing this growth. It’s been difficult to take the business to the next level” Dr Penn, whose wife Linda is a Lowes Manhattan retail clothing heiress, said he expected Southern Dental to continue to grow as much as 20 per cent a year in revenue and gross profit in the next three years. The 56-year -old saw an opportunity to break into the local dental prosthetics market by going to Asia to have crowns, dentures, veneers, bridges and grinding splints made 30 years ago. “When I graduated I knew that in Australia the cost of dental prosthodontics was high,” he said “I thought there was an opportunity with local laboratories. I went to Hong Kong in 1983 and it took a while to get that right. There were tanks at the borders. That was when we communicated by telex machine.” Dr Penn got involved with Hong Kong University dental school in 1986. He said this move “set the company up for change given the high level of dental technology”. Dr Penn and his wife gained some unwanted media attention in 20 1 0 after buying a $44 million Point Piper harbour front property, Villa Veneto. The media-shy Dr Penn said he was adopted as a baby and grew up in Sydney’s Bondi. He went to Sydney Boys High School and graduated from the University of Sydney at age 22, when he bought his first practice. His relatively humble background, growing up with his mother who worked as a pharmacist’s assistant and a father who worked in a hardware store, has kept him grounded despite his business success, he said Dr Penn is not only a successful dental surgeon in Double Bay, he has also developed of range of new appliances for temporomandibular disorders and sleep apnoea. He still works about seven hours a week in this Double Bay practice and also teaches internationally on aesthetic dentistry and the invisible braces known as Invis align. “We see a lot of growth opportunity in the Invisalign products;” he said “I wrote the accreditation course for

Teaching general dentists how to use Invisalign. We have a very powerful education arm. Basically, anything you can put in your mouth we can make it.” His most recent developments include the Penn Composite Stent, which is a system for producing morphologically idyllic, inject able composite veneer restorations without tooth preparation.

Under the deal with Ironbridge, Southern Cross is valued at $95 million, including debt, which is an estimated six times earnings before interest and tax. Ironbridge will control about 60 per cent of the business, while Dr Penn and management will retain the remainder. The joint chief executive and founding partner of Ironbridge, Neil Broekhuizen, will join the new holding company, which will own 100 per cent of the Australian and New Zealand operations and 40 per cent of the UK and Ireland business. “Ironbridge has been a consistent investor in the healthcare sector and we see significant growth opportunities both in Australia and New Zealand and to develop overseas businesses that Southern Cross Dental has already invested in,” Mr Broekhuizen said.