‘NHS contract’ practices highly prized in market

Practices with NHS contracts are highly prized in the sales market, research reveals.
And bankers are now much happier to lend to dentists on a purchase of an NHS or mixed practice than a private practice.

According to a goodwill survey conducted by NASDAL, the speciaiists in dental business and law, the average dental practice sale value has increased for the quarter ending 31 October 2011, standing at 107% compared to 90% in the last quarter.

This three-figure percentage figure reflects the significant number of practices with highly prized NHS contracts changing hands.
Alan Suggett, the NASDAL member who compiles the quarterly survey, said practices with NHS contracts continue to be highly sought after and these deals are pushing up the overall statistics.
Average percentage of goodwill to fee income is 121% for NHS dental practice sales. Only a small number of private practices were sold in the quarter July-October and mostly for less than 100% of turnover, thus bringing down the overall figure.
Valuations continue to be a part of the survey but the trend continues for valuation figures to be outstripped by deals the average valuation being 96% of turn-over.

Alan, a partner in UNW LLP, specialist dental accountants, said: ‘On the one hand, you have corporates buying practices with large contracts for up to 200% of turnover while at the other end of the scale, distressed sales are being agreed at 20%.’

Russell Abrahams, a solicitor and founding partner of specialist law firm Abrahams Dresden, based in London, claims that orthodontic practices are also proving popular and are changing hands more readily than in the past.
Although the high value of NHS practices may not be enduring, he continued, the trend was likely to continue until the introduction of a new contract in 2014.

This was time enough for a dentist to consolidate the practice purchase and build up a reputation in their area.

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