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 31st October 2021 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 saw a varied picture for NHS, Private and Mixed practices. Overall, there was a small increase in goodwill as a percentage of fee income in the quarter across all types of practice – deals averaged 152% of gross fees – up from 144% in the quarter to 31st July 2021.
The big increase in values was for mixed practices which saw practice goodwill at 179% of gross fees – a big jump from 145% in the last quarter. Private practice goodwill values stayed steady at 132% of gross fees (133% in the previous quarter).
However, NHS practices saw a big drop in goodwill values to 138% of gross fees – down from 161% in the quarter to 31st July 2021.
NHS Practices – no longer the ‘safe’ option?
Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, commented, “These results may come as a surprise to some coming as they do, in the uncertainty of a worldwide pandemic. It may also be the case that the pandemic is causing deals to take longer to get done than they usually do and this is skewing the figures in this quarter.
“It could be that this is the beginning of a trend as dentists turn their back on NHS practices due to uncertainty around their value in years to come – only time will tell. Their guaranteed income at this time still makes them an attractive investment to some buyers. NASDAL colleagues are still reporting that the practice sales market is robust and that sale prices are not being reduced and are reaching their full potential.”
NASDAL reminds all that as with any averages, these statistics should be treated as a guideline only.
These results may come as a surprise to some coming as they do, in the uncertainty of a worldwide pandemic.