Goodwill values for those practices actually sold has continued to experience a drop, according to the latest NASDAL survey.
Values have dropped by 9% since July 2016, with practice valuations beginning to follow the same downward trends.
NHS practices continue to hold a high premium, selling for an average of 156% of goodwill as a percentage of fee income, whilst private practices sold for an average of 101%.
‘Loss of confidence’
‘This quarter’s figures show the average of goodwill as a percentage of fee income on those practices actually sold, continue to drop back and there is a great discrepancy between valuations and deals,’ Alan Suggett, specialist dental accountant and partner in UNW LLP, said.
‘I reported in the last survey that practice sales agents had told me that there was still huge appetite for practices and the withdrawal of Mydentist would have little or no effect on the market.
‘There seemed to be a general perception that the corporates, including Mydentist, were buying up every practice across the country.
‘Whilst this wasn’t true and Mydentist was only responsible for a small percentage of sales, it does seem that its withdrawal may have lead to a more general loss of confidence.
‘With a time lag between valuations and deals done, it will be interesting to see if the quarters to come will reflect the optimism of these high valuations when it comes to actually signing on the dotted line.’