DT News - UK - Goodwill decreases owing to uncertainty in practice sales market

Dental Tribune International

Wed. 12 April 2017

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KESWICK, UK: Despite a drop back in the average of goodwill as a percentage of fee income, both NHS and mixed practices have continued to attract a significant premium, according to the latest goodwill survey by the National Association of Specialist Dental Accountants and Lawyers (NASDAL). Practices sold at an average of 126 per cent of goodwill as a percentage of fee income in the last quarter ending 31 January, with NHS practices attracting an even higher rate of 156 per cent, the figures demonstrate.

With an average 101 per cent of goodwill as a percentage of fee income, private practices too have remained steady compared with previous quarters.

According to Alan Suggett, specialist dental accountant and partner in UNW who compiles the goodwill survey, the results indicate a greater discrepancy between valuations and deals, but also a higher uncertainty in the market, particularly when mydentist withdrew from buying new practices in recent months.

“There seemed to be a general perception that the corporates, including mydentist, were buying up every practice across the country,” Suggest said. “Whilst this wasn’t true and mydentist was only responsible for a small percentage of sales, it does seem that their withdrawal may have led to a more general loss of confidence.”

“With a time lag between valuations and deals done, it will be interesting to see if the quarters to come will reflect the optimism of these high valuations when it comes to actually signing on the dotted line,” he added.

The goodwill figures are collated from accountant and lawyer members of NASDAL on a quarterly basis in order to provide a useful guide to the practice sales market.

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