Private buyers and small groups gaining ground over large corporates in practice sales
The latest NASDAL goodwill survey reaffirms the ongoing appeal of an NHS contract, with NHS practices and mixed practices still commanding higher prices. In the quarter ending April 30th the average goodwill value of NHS dental practices in the survey increased by 20% to 138% of turnover, and mixed practices stood at 106% of turnover. The average goodwill for all practices was 97% of turnover, which is consistent with the previous quarter.
A major change in the dental practice sales market can be seen in the acquisition strategies of the large corporates. Whilst they are still acquisitive, there are more instances of private buyers and small groups outbidding the large corporates.
Said Alan: “I am aware of a dental practice on the market in Essex where a corporate chain had been ready to pay just under £1m but they were outbid by a private buyer willing to pay £1.5 million in order to secure the deal.”
Alan continued: “Dentists looking to buy, expand or take on another practice must always carry out a viability forecast to make sure it is affordable.” He went on to advise that if a practice isn’t affordable, it is sensible to presume that it is overval- ued, and if price reduction negotiations are not successful, to walk away.
He went on to stress that the figures in the goodwill survey are helpful and interest- ing, but they should be treated as “simply an interesting point in time average.”
PRACTICE OWNERS—Do you know what “normal” looks like?
Year to year fluctuations in fee income, associate payments, investment in equipment, and tax bills, can make it difficult or even impossible to see the wood for the trees.
We have recently started carrying out “Practice viability forecasts” for existing practice owners.
The ability to perform “what ifs” can be very interesting. Looking forwards rather than backwards can help you take important financial decisions. The cost of this is usually £500 plus VAT, and can sometimes be subsidised by a grant.
If you are interested in participating in a forecasting exercise please get in touch with Alan Suggett: email@example.com / 0191 243 6009.