New owners sink teeth into DenMat
DenMat, the maker of Lumineers dental veneers and a major Santa Maria employer, has a new owner and a new chief executive.
Centre Partners, a private equity firm, and Mill Street Partners, a firm founded this year by dentistry industry veterans, took control of the company on Nov. 15. The acquisition comes four years after DenMat was purchased by DLJ Merchant Banking Partners, the private equity arm of megabank Credit Suisse.
According to a press release, Steve Semmelmayer, one of the partners in Mill Street Partners, is DenMat’s new CEO.
“Over the past three decades, DenMat created an extraordinary track record and built some of the most successful brands in dentistry,” Semmelmayer said in the release. Mill Street, Semmelmayer and Centre did not return repeated requests for comment.
The sale marks a high-profile exit for DLJ, which bought into DenMat in 2007, at the height of the credit bubble. People familiar with the transaction described it as leveraged, but DLJ declined to comment about the terms of the sale.
DenMat told the Business Times in 2009 that it had 450 employees in Santa Maria and had pulled in $115 million in revenue the previous year.
The company was founded in 1974 by Robert Ibsen, an entrepreneurial dentist and marketing mastermind. DenMat pioneered the Rembrandt brand of whitening toothpaste and, along with it, the idea of premium toothpaste. Rembrandt is now owned by Johnson & Johnson.
For the past two decades, DenMat has produced a range of products used by dentists for the restoration and preservation of teeth. But the company’s flagship brand is Lumineers, a cosmetic porcelain dental veneer that offers dentists several advantages over traditional veneers. Lumineers are about the thickness of a contact lens and can be applied without grinding down a patient’s teeth. That makes them less painful to install, and reversible.
Former DenMat employees told the Business Times the company hit strong headwinds during the recession. As consumers lost jobs, many of them also lost dental insurance and quit visiting the dentist. That bit into the business generated by DenMat’s restoration products.
At the same time, spending on cosmetic dental procedures dried up as consumers tightened household budgets. Lumineers is positioned in the market as a premium alternative to traditional tooth veneers.
But DenMat has weathered previous recessions, a former employee said. “[DenMat] has been around for a long time. It’s got a strong brand name in Lumineers. They make a great product. There’s a lot of goodness there,” said one former employee. “I think the company has the potential to do well, but unfortunately private equity got involved at exactly the wrong time at the height of the market in 2007.”
After the DLJ transaction, Nicholas Teti, the CEO who oversaw the sale of Santa Barbara-based breast implant maker Inamed to Irvine-based Allergan, replaced Isben as the CEO of DenMat. At the time, Teti said his goal was to transform DenMat from a founder-driven niche company into an aesthetic dentistry powerhouse along the lines of Allergan, whose Botox wrinkle treatments are a household name.
“Every aesthetics report you read, it’ll go through Botox, Restylane, Juvederm, breast implants, laser therapy, liposuction. It’ll never talk about the teeth,” Teti told the Business Times in 2008. “My job is to make sure that people start talking about [teeth]. As it goes with making your face beautiful, your teeth and your smile have to be part of the program.”
There are signs that Teti disagreed with DenMat’s new ownership over how best to expand DenMat.
He was quietly replaced as CEO by Stephen Ziskind as DenMat entered into an agreement with Remedent, a Belgian firm, to be the U.S. manufacturer and distributor of a product called GlamSmile. According to Remedent’s public filings, DenMat has spent about $6.5 million on the deal so far — $2.4 million in an upfront payment, $3.5 million in milestone payments and $618,000 in royalty payments.
“Our goal is to leverage DenMat’s brand equity by expanding the product offering and providing dental professionals with a wide range of smile solutions,” Semmelmayer said in his statement.
Former employees said that despite the recession’s impact on cosmetic dentistry in general, DenMat remains the leader in the space.