The average value of dental practices is slowly recovering, according to the latest quarterly goodwill figures from NASDAL.
Dental practice valuations have been declining from a high of 153% of fee income in October 2017.
The latest quarterly results show practice valuations are rising, from 126% to 131% of fee income in the latest quarter.
Goodwill figures as a percentage of gross fees across all practices for deals done were up 2% on the previous quarter.
NHS practices
NHS practices are experiencing an increase in average goodwill values after three quarters of reductions.
Latest average goodwill values are 149% of gross fees, up from 118% in the quarter ending 31 January.
Mixed practices also saw a rise with an average goodwill value of 146% of gross fees – up 38%.
‘It is interesting to note that NHS practice values are back up,’ Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, said.
‘I wonder whether with Brexit/no Brexit looming, banks are looking for any kind of certainty that they can find.
‘Anecdotally, I also hear that banks are keen on practices with a significant plan income.
‘In uncertain times it is perhaps natural to cling on to any reassurance that one can find.’
‘Big money’
Fully private practice sales were relatively steady at an average goodwill value of 120% of gross fees.
‘There are still plenty of private equity backed corporates paying big money if your practice is in the “right” place,’ Mr Suggett continued.
‘However, if you are a single-handed practice with a small NHS contract value and low UDA rate in Cumbria or Cornwall, I wouldn’t hold your breath.’
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