Selling Your Dental Practice – NASDA Goodwill Survey

Dental practice sales are still being agreed at an impressive goodwill value of 100% of fee income, allowing some retiring dentists to achieve a golden farewell, despite the economic downturn.

This analysis is the result of the latest goodwill survey from NASDA, the National Association of Specialist Dental Accountants (NASDA), and provides evidence that the dental practice sales market remains relatively buoyant in some quarters.

Alan Suggett, who has carried out the quarterly survey on NASDAs behalf since October 2007, said that whilst the number of sales has slowed down and banks are definitely taking longer to come up with loans, nevertheless some good deals are still proceeding.

His figures showed that valuations and actual sales for the quarter ending January 31 were both on average at around 76% of turnover. In the summer of last year, dental practice values peaked and this was illustrated by average valuations of 86% being outstripped by deals of 98%..

Alan commented: “My view, based on the detail of the latest survey results, is that the market has become very difficult to summarise in one headline figure. There are still sale/purchases at 100% or more, and there are still vendors who don’t realise the market rate and sell very low.

“Then there are dentists who choose to sell for a lower price than they could command on the open market. When a retiring dentist wants his or her younger associate to buy the practice, they seem to make what we have coined ‘an emotional discount’.”

“Another feature”, continued Alan, “is that the main lenders are much more reluctant to lend larger amounts, but are still relatively free and easy with lower lending levels – impacting  on the ‘big ticket goodwill deals. Also, the uncertain market is being used by corporates to drive harder bargains.”

Alan, who has 120 dentist clients and is a well-known figure in the world of dental accountancy, will in future be carrying out the quarterly goodwill survey from a new office. He has just moved to unw, the Newcastle-based firm of chartered accountants, now a NASDA member as a result of Alans move there.

A popular speaker at dental events, he said of his new role: “I am delighted to have moved to unw.  The greater flexibility of an independent firm will be helpful especially in exploiting the opportunities which have opened up for entrepreneurial dentists.”

Alan can be contacted at 0191 243 6000 or click here