Last quarter marks significant increase in private practice goodwill

NASDAL goodwill surveyAll types of practice have seen an increase in goodwill as a percentage of fee income in the last quarter.

This is according to the latest findings from the NASDAL Goodwill Survey.

Covering the quarter ending 31 January 2022, it reveals a continuing pattern of increases in goodwill values across the board. However less enthusiasm is seen for NHS dental practices than was seen pre-pandemic.

Generally there was an overall increase in goodwill as a percentage of fee income in the quarter across all types of practice – deals averaged 166% of gross fees, for example.

This is up from 152% in the quarter to 31 October 2021 and from 144% for the quarter ending 31 July 2021.

Private versus NHS

For private practices:

  • Practice goodwill was at 155% of gross fees – a large increase from 132% in the last quarter
  • Mixed practice goodwill values also increased to 189% of gross fees (179% in the previous quarter).

For NHS practices:

  • Practice goodwill increased slightly after a big fall in goodwill values in the previous quarter
  • They were at 141% of gross fees, an increase from 138% in the previous quarter to 31 October 2021.

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Continuing upturn

Alan Suggett is a specialist dental accountant and partner in UNW LLP, who compiles the goodwill survey.

He said: ‘I am pleased to see the practice sales market behaving in a resilient fashion and continuing its upturn as we hopefully leave the worst of the pandemic behind.

‘In the many conversations that I have with professional advisers, banks, agents and so on, it is becoming clear – at least anecdotally – that there is less enthusiasm for NHS practices at this time.

‘Whilst the reason for this is uncertain, my view is that it arises as a consequence of a combination of factors.

‘For example uncertainty about the financial basis of NHS contracts post 31 March 2022. Particularly as the current 85% threshold is proving impossible for many practices to achieve.

‘Others include the drift of NHS patients into the private sector during the pandemic and increasing recruitment problems made worse by reducing enthusiasm for associates to carry out NHS work.’

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