Goodwill – a divided nation
PERHAPS rather aptly for the current political climate, a National Association of Specialist Dental Accountants and Lawyers (NASDAL) survey for the quarter ending
31 July 2018 shows a divided country with a huge disparity in practice goodwill values.
Across the quarter, NASDAL members acted for their clients in the sale of practices with a range of values between 47 per cent of gross fees and 313 per cent of gross fees.
A wide range indeed.
The headline figure for deals was up slightly – an average goodwill value of 136 per cent of gross fees, a return to the level of the quarter ending 31 January 2018. Average valuations saw a big drop of 12 per cent from the quarter ending 31 July. NHS practices are still in huge demand with a significant number of sales in the quarter at considerably more than 200 per cent of gross fees.
Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the survey, said: “I think that a range of more than 250 per cent illustrates how divided dental practice sales are in the UK (and also how difficult it is to make predictions for the UK market as a whole). When I started specialising in dental accounting, if someone had suggested a goodwill value of 313 per cent, they would have been laughed at! But, if your practice ‘ticks the right boxes’ then it seems that the market will pay what you want. However, if it doesn’t, you may have trouble selling it at all.”
In Scotland, Cliff Fleming, partner at Condie & Co Chartered Accountants in Fife, said: “The valuations attributed by certain valuers have been in excess of what the market has been prepared to bear, primarily dictated by what the financial institutions are prepared to fund. As a result, during 2018, valuations have moved closer to deal prices rather than the other way around. This has helped to alleviate difficult discussions between buyers/sellers when buyers have to educate sellers as to what their practice is actually worth in the market place.”