Dental practice valuations rise while actual deals fall

Practice valuations have continued to rise while actual deals have started to fall, new figures from NASDAL show.

The latest Practice Goodwill survey from the National Association of Specialist Dental Accountants and Lawyers (NASDAL) shows valuations of NHS practices are still commanding higher values than private and mixed practices.

Despite the value of deals done dropping in the latest quarter to 134% of gross fees, this still marks an increase of 12% compared with the previous quarter.

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‘Dental practice acquisition and disposal remains buoyant in London and the south east, despite the gloom and doom predictions for the new contract, increase in borrowing costs and capping of NHS pay,’ Ajay Patel, partner at Elan & Co LLP in London, said.

‘With high values I see high gearing and an over optimistic view by acquirers in their own ability to develop and grow the practice.

‘Many acquirers do insufficient financial due diligence work only to find that they are burdened with a practice in which most of their income goes towards servicing loans and reinvestment.

‘High acquisition costs demand that any potential acquirer should consider carefully all financial aspects, not only for the acquisition but also some years after acquisition.’

NASDAL reminds all that as with any averages, these statistics should be treated as a guideline only.

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