Practice sales market ‘still in good health’

15 September, 2023 / infocus
 Will Peakin  

This week saw the release of the latest statistics from NASDAL (National Association of Specialist Dental Accountants and Lawyers) and its quarterly Goodwill Survey. This survey covers the quarter ending 30 April 2023 and includes data on valuations as well as deals completed (i.e., practices bought or sold by NASDAL members’ clients in the period).

NASDAL said the quarter saw a market that is continuing to do well. Goodwill values stayed steady at 151 per cent as a percentage of gross fees – very similar to the 156 per cent of the previous quarter.

However, NHS practice values did appear to fall back sharply with values of 133 per cent as a percentage of gross fees – down from 163 per cent in the quarter ending 31 January 2023. We will watch to see if this becomes a trend with interest.

Indeed, values for private and mixed practices in this quarter were almost identical to the last – 145 per cent and 160 per cent respectively versus 143 per cent and 162 per cent in the last quarter.

There was a big rise in valuations – 175 per cent as a percentage of gross fees compared to 116 per cent previously. Valuations are not done deals though so it will be some months before we see whether this has translated into real returns.

‘Sensible pricing

Johnny Minford, Principal of Minford Chartered Accountants and NASDAL Media Officer, said: “The practice sales market is still in good health. Profitable practices are selling and we have seen what I might consider to be more sensible pricing in recent months.

“The number of interest rate rises has possibly brought values down a touch but the longer term effect of this in bank lending is yet to be fully seen so we will see if this means higher values in the months to come.

“One phenomenon of note is that of the ‘Associate-led practice’. I have seen a number of practices marketed in this fashion as if the new buyer and Principal will have nothing to do? All good practices need motivated team members and Associates but also need considerable time and thought from the owner too.”

The goodwill figures are collated from accountant and lawyer members of NASDAL in order to give a useful guide to the practice sales market. These figures relate to the quarter ending 30 April 2023. NASDAL cautions that as with any averages, these statistics should be treated as a guideline only.

Tags: goodwill / NASDAL

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