NASDAL Goodwill Survey – ‘market continues to bounce back’
This week has seen publication of the latest results from the NASDAL (National Association of Specialist Dental Accountants and Lawyers) Goodwill Survey statistics. This survey covers the quarter ending 31 January 2022 and includes data on valuations as well as deals completed (i.e., practices bought or sold by NASDAL members’ clients in the period).
The quarter showed a continuing pattern of increases in goodwill values across the board but with less enthusiasm for NHS dental practices than was seen pre-pandemic.
Overall, there was a significant increase in goodwill as a percentage of fee income in the quarter across all types of practice – deals averaged 166 per cent of gross fees – up from 152 per cent in the quarter to 31 October 2021 and from 144 per cent for the quarter ending 31 July 2021.
Private practices saw practice goodwill at 155 per cent of gross fees – a large increase from 132 per cent in the last quarter. Mixed practice goodwill values were also on the up as they rose to 189 per cent of gross fees (179 per cent in the previous quarter).
NHS practices did see a slight increase after their big drop in goodwill values in the previous quarter. They were at 141 per cent of gross fees – up from 138 per cent in the quarter to 31 October 2021.
NHS Practices – less enthusiasm?
Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, said: “I am pleased to see the practice sales market behaving in a resilient fashion and continuing its upturn as we hopefully leave the worst of the pandemic behind.
“In the many conversations that I have with professional advisors, banks, agents and so on, it is becoming clear – at least anecdotally – that there is less enthusiasm for NHS practices at this time.
“Whilst the reason for this is uncertain, my view is that it arises as a consequence of a combination of factors – uncertainty about the financial basis of NHS contracts post 31 March 2022, particularly as the current 85 per cent threshold is proving impossible for many practices to achieve, the drift of NHS patients into the private sector during the pandemic, and increasing recruitment problems made worse by reducing enthusiasm for associates to carry out NHS work.”
The goodwill figures are collated from accountant and lawyer members of NASDAL in order to give a useful guide to the practice sales market. NASDAL said that, as with any averages, the statistics should be treated as a guideline only.