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The value of dental practices continues to rise for the sixth quarter in a row, latest NASDAL figures show.
Goodwill rose to 159% of gross fees in the last quarter up to January, compared to 157% in the previous quarter. This continues a sustained increase every quarter from a low of 122% of gross fees in the quarter ending October 2018.
The increase predominantly comes from a jump in private practice values. NHS practice values dropped in the latest quarter from 166% of gross fees to 155%.
Practice value uncertainty
‘It’s fair to say that the most interesting part of this survey is effectively what it doesn’t show,’ Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, says.
‘That is what has happened since March 2020 and the advent of the coronavirus pandemic. Following this, I think it is fair to say that the days of the spectacular corporate deals are over.
‘We obviously spend a good deal of time speaking with other professional service providers such as bankers etc. The prevailing view is that we are currently in a “marking time” stage as everyone waits for normality to return. And, most do expect normality to return. The number of practice sales during the last few months has massively reduced and those that are being done are often seeing a substantial discount to go through.
‘At present, most buyers are requesting a delay in the process. There is more uncertainty with regard to lender valuations. Some valuers are valuing at pre-COVID levels. But base this on the assumption of a longer sale period, rather than the previously normal six months. Lenders are still happy to lend. But they want more information such as up-to-date management accounts, or even vendor prepared cashflow forecasts.’
Practice valuations
Valuations have saw a big jump over the previous quarter, figures show.
Valuations saw a large drop to 132% of gross fees in the quarter ending October 2019. Since then they have recovered to 157% of gross fees in the latest quarter.
