Dental practice valuations experience a sharp drop

Dental practice valuations have taken a sharp drop in the last quarter, dropping to 128% of fee income.

That’s according to the latest quarterly goodwill survey from NASDAL, which shows valuations have dropped by 12%.

Despite this, the value for deals completed is slightly up, with an average goodwill value of 136% of gross fees.

‘I think that a range of more than 250% illustrates how divided dental practice sales are in the UK,’ Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, said.

‘When I started in dental accounting, if someone had suggested a goodwill value of 313%, they’d have been laughed at!

‘But, if your practice “ticks the right boxes” then it seems the market will pay what you want.

‘However, if it doesn’t, you may have trouble selling it at all.’

Corporates looking to buy

Corporates may be looking to start purchasing dental practices again, this time with a little more focus, Alan Suggett believes.

Mydentist recently admitted to ‘growing too quickly’, after some of its practices closed and the company’s lack of acquisitions.

Bupa on the other hand has recently announced a string of acquisitions over the past year.

‘We’re regularly acquiring new practices and do so on the understanding they’re much more than just bricks and mortar,’ Ruth Chesmore, acquisition director for Bupa Dental, said.

‘As a buyer we are considering everything from a practice’s history and local reputation, through to the dedication and experience of the team.

‘Of course there are two sides to any deal.

‘Whilst we’re looking for practices that will complement our portfolio, in return we offer them opportunities to enhance their customer and colleague proposition, while providing a long term home for the team.’

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