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A group of dentists from around the country have filed an action in the Chancery Court of Delaware to gain access to the books and records of the dental practice roll-up group to which several of them sold their independent and small-group dental practices.
The case is Edmund Eaves et al. v. ZAHN Parent, LLC, C.A. No. 2023-0675. ZAHN Parent, LLC, is an affiliate of North American Dental Group (NADG), one of the nation’s largest dental service acquisition organizations.
Founded in 2008 and headquartered in Pittsburgh, Pennsylvania, NADG was acquired by Jacobs Holding in 2019. The partnership with NADG significantly expanded the footprint of Jacobs Holding’s dental care activities and created the first transatlantic dental group. Colosseum Dental Group (CDG), the leading European dental care provider, is majority owned by Jacobs Holding.
NADG owns and operates approximately 240 dental practices in 15 states. ZAHN ownership shares were issued to the dentists as part of their compensation and investment.
The dentists are seeking to uncover management decisions that significantly changed their ownership value in the company and may have diluted and negatively impacted their retirement and other financial support.
In the Chancery Court action, the dentists are seeking copies of documents of any transaction in the last 12 months that involved the issuance of additional units that diluted their equity position.
The claim by the dentists asserts that the company cannot deprive the minority equity owners of information that is reasonably necessary to evaluate the value of their equity interests or to assess potential legal claims related to their minority ownership.
As stated in the complaint, this includes any definitive agreements, offers, term sheets, valuation documents or other transaction documents that are necessary to evaluate “the propriety of recent transactions entered into by Zahn.” The request also seeks copies of audited financial statements, monthly financial reports, and tax returns.
Many of the dentists built up their practices over the course of decades. The dilution of their equity has impacted their retirement and legacy planning.
NADG’s management has refused to provide the dentists with the information needed and forced them to file suit to obtain basic information. According to the complaint, some of the dentists who still work for NADG fear retaliation for attempting to seek information from their company.
Over 100 doctors have retained Harris Beach PLLC and Dickinson Wright PLLC to represent their interests in challenging the disputed transaction.
Group Dentistry Now has reached out to North American Dental Group for comment. Article will be updated with their response.
Source: An executive committee of dentists
