Suki Singh talks to Chris Strevens of Frank Taylor and Associates, about practice values during the pandemic and how a membership plan can increase the value of your practice.
Like so many things over the past year, the practice sales market has been changing. We’ve seen more than ever how important a membership plan is when it comes to the value of your practice.
I caught up with Chris to talk practice values, plans, and what you should do if you’re thinking of selling.
Has there been much of a change in practice values in the last year and how does the market look now?
People are surprised to know values remain really strong despite the pandemic. Many practices are still valued at what they were pre-COVID. And in some cases, they are now higher.
One market change has come from associates. Because they weren’t earning very much in the first lockdown, they have decided to secure their futures by buying up practices.
During that period, we saw 400 people register with us. So there has been a huge demand for buying over the last year.
How important is a membership plan to the value of a practice?
If you’ve got a membership plan in place it is only going to add value to your practice. It shows you have a regular revenue coming in. And now, after the year we’ve had and after the three months when practices were shut, plans have become more important than ever.
Those who had plans in place faired an awful lot better during lockdown than those that didn’t.
Before the pandemic they provided desirable income and weren’t seen as essential. But now, practices are seeing them as important.
The way the market is at the moment just shows how much those in the profession are valuing plans now. There are many practices who are not accepting new private patients unless they join their plan. They are saying: ‘Yes we are open for new patients, but only if they sign up to a plan’.
A really simple way of seeing how important plans are, and how they impact values, is by imagining two practices in the same location.
Say for example, we have two practices on the same street in north London. They are both up for sale. One has a well-populated membership plan in place. I believe the practice with a plan would go for more on the open market.
We’ve heard how many associates are looking to move into the market, however others are looking to move on. What would your advice be to the latter if they were looking to sell or retire?
If you’re having thoughts of selling, then I would get a membership plan in place as early as possible.
If you want to sell or retire in three years, put the plan in place now. Then you’ll have enough time to grow the client base and increase the value.
Make sure you are able to evidence how sustainable and profitable your business is. Your value is a multiple of your profit. So, if you have a sustainable, consistent and growing profit, then you are going to bring in a higher value.
Another tip is to get a true valuation, rather than one from a corporate who has dropped a leaflet through your door. Going to an approved and well-known firm to get your valuation is key to getting as much as you can for your practice.