Dental practices sales are moving from launch to offer accepted offer within two to three weeks as intense competition pushed some buyers to bid above asking price during viewings.
The rapid pace, compared with seven to eight weeks previously, was described as one of the biggest frustrations facing buyers during a National Association of Specialist Dental Accountants and Lawyers (NASDAL) annual UK meeting in London earlier in October.
Participants said some buyers were attempting to secure practices immediately, leaving sellers with little time to assess competing offers or consider which transaction was most likely to complete.
More banks financing acquisitions
Greater access to finance was identified as one reason for the acceleration. Meeting attendees said more banks were willing to lend within the dental market, with competitive rates and longer repayment terms making acquisitions more affordable.
This was particularly evident among independent buyers acquiring their first, second or third practice and smaller groups expanding their portfolios.
Larger corporate operators were described as more selective, apart from the biggest groups pursuing substantial acquisitions.
‘Dental deserts’ attracting buyers
Locations with longstanding recruitment difficulties were also attracting acquisition interest.
Some groups were reportedly more willing to consider practices in areas described as ‘dental deserts’, as concern about recruitment had begun to ease.
CQC slowdown ‘not necessarily a bad thing’
The speed of bidding contrasted with the preparation required before a transaction could be completed.
Care Quality Commission (CQC) processes in England were described as challenging and capable of delaying individual deals. However, the additional preparation was not viewed only as an obstacle.
One participant argued that requiring policies and supporting documents earlier encouraged buyers to become organised from the beginning of the process.
This was said to have reduced the bottleneck created when applicants completed their interviews but could not progress because their documentation was missing.
Capital gains tax uncertainty
The approaching budget on 28 October also prompted discussion about whether tax changes could affect dental practice sales.
Participants appeared less concerned about a substantial increase in capital gains tax than they had been before the previous budget, when some feared that rates could be brought closer to income tax rates.
No consensus emerged about what the chancellor would announce. One contributor suggested that a significant increase could discourage transactions and prove counterproductive for government receipts.
Possible changes to pension tax relief and tax-free cash were also discussed, although participants said they had seen nothing to indicate that either measure would be included.
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