What does the future of practice ownership look like?
Paul Graham explores what the future may hold in terms of dental practice ownership and how prospective purchasers can make the most of current market opportunities.
After some very challenging times for all of us, there are some great opportunities opening up in dentistry. This is from both a clinical and a business point of view.
In terms of the latter, which is where our expertise lies, this has been borne out by a marked and reinvigorated appetite from first-time buyers purchasing their own practices.
This is not a new trend by any means. Rather, it represents a surge of activity emphasised by the pandemic as associates seek income security through practice ownership. This is often well supported by major high-street banks (more on this later).
In addition, many young entrepreneurial dentists are following in the footsteps of peers and principals of the practices they are currently working within.
Many independent multi-site practice owners are figureheads of the profession. It’s common to see new/younger dentists being shaped by this.
For first-time buyers, as well as established practice owners looking to branch out, it is important to consider what the future may hold in order to create a long-term plan – albeit a fluid one, by necessity – to feel as secure as you can with the choices you make now.
Clearly, financial backing is imperative when it comes to purchasing a practice, be it a squat or an established business.
The good news is the financial establishments that lend in the dental sector are considering applications with a positive view. To offer a little context on this, Christie Finance delivered a number of applications to lenders in the sector in 2021, with 69% of finance secured used to purchase a dental practice.
Lenders are looking at all aspects of the business. From the dental and management experience of the buyer, to how the practice will be run post-purchase and from its history to its potential.
This offers a little insight into the information lenders are looking to ascertain. However, we would always recommend resisting approaching lenders directly. This is because you only get one chance to get a loan approved with each lender.
It is therefore best to make sure your application is presented by an experienced and specialist broker in the correct manner.
Whilst on the issue of seeking out experienced help for the purchasing process, as well as advice for future-proofing your career as far as is practicable, speak with a specialist solicitor, accountant, and a valuation/sales expert such as Christie & Co. We are sector specialists and have a wealth of knowledge that can help to ensure your purchase proceeds as smoothly and with as little stress as possible.
Beyond being a VT, it’s important for a qualified dentist to get job and patient experience.
Rushing into practice ownership isn’t advisable; after all, buying a practice is going to be one of the biggest life decisions you’ll make.
Finding out where in the country you want to live and be based is realistically the first stage of the process. Then you can start to build your practice empire around you.
In addition, for many prospective purchasers, the NHS versus private conundrum is always an important issue to consider carefully. Around 75% of practices in the UK have some form of NHS offering. In the last 12 to 18 months, we have reported a significant swing towards private dentistry.
The increase in consumer spend for higher value private treatments has helped clinicians to recover and, in many cases, exceed previous income levels.
This has created a buzz and demand from buyers wishing to acquire private practices. Although, it still very much remains the case that the NHS is an attractive proposition.
When deciding what is right for you, consider issues such as:
- Any pre-existing reputation
- Any patient base limitations/expectations
- Opportunity to enhance through further efficiencies/growth
- Catchment size and profile
- What is next door? Consider future growth
- Accessibility (traffic/parking/street level entry – can people walk straight in?)
There was a noticeable increase in demand for orthodontic practices in 2021, and we expect this trend to continue.
Several large corporate groups have employed dedicated orthodontic acquisition managers tasked with securing more ortho-focused practices to increase their offering in this space.
The rise in popularity of aligners, cosmetic dentistry and the impact of video conferences/meetings over the couple of years, has led to an upsurge in the number of patients seeking straightening and whitening treatments.
We are also seeing a number of the new orthodontic contracts in England (seven years + three years) come to the market. The demand for these has been strong, particularly amongst corporate operators.
Values per unit of activity are lower but contracts are longer. They provide a greater degree of security than the previous versions.
The limited supply of these seven + three-year opportunities have resulted in competitive bidding. The same corporate buyers are looking further afield with significant orthodontic transactions happening in the Scottish market. Here, there are no time limited contracts, but they remain as valuable.
From Christie & Co’s perspective, 2021 was a record year for practice sales. Indeed we:
- Arranged 530+ viewings
- Secured a minimum of one offer for every two viewings
- Received 330+ offers, with an aggregate value of £630m+
- Completed on 110+ practice sale
- Sold 75% of practices to independent buyers.
Based on our personal experiences in the market and the figures, which speak for themselves, it would seem fair to suggest that dentistry is poised to flourish in the UK. Forward-thinking dentists will be considering how they can make the most of it for themselves and their future patients.
If you’re interested in selling or buying a practice, or for further information about the market itself, email
[email protected] or call 0131 524 3416/07739 876 621.