Practice Goodwill Values "on the slide"
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- Published: Monday, 06 November 2023 07:50
- Written by Peter Ingle
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These are not GDPUK’s words, but those of the National Association of Specialist Dental Accountants and Lawyers (NASDAL), who state that “Goodwill values are on the slide” with figures to support their claim.
The NASDAL quarterly Goodwill Survey, is an established part of the dental business calendar and recent reports have presented an uncertain picture. The latest survey covers the quarter ending 31st July 2023, and includes data on valuations as well as deals completed for practices bought or sold by NASDAL members’ clients in that period.
The quarter ending 31st July 2023 saw a market described as steady but perhaps seeing signs of a slow-down. Goodwill values were at 145% as a percentage of gross fees - similar to the 151% of the previous quarter. Private practice values were at 150% as a percentage of gross fees - up slightly from 145% in the quarter ending 30th April 2023. However, mixed practices saw a significant drop compared to the previous quarter - 132% as a percentage of gross fees compared with 160% previously.
Mike Blenkharn, Partner and Head of Dental at UNW LLP who compiled the goodwill survey commented, “I would certainly say that deals are down compared with 2022. We have entered a quieter period of the practice sales market. Indeed, our last three goodwill surveys have all shown a downward trend. I believe that this is down to a number of factors - the biggest being the increased interest rates and not just in regard to the cost of business borrowing but also that of personal borrowing; in particular mortgages.
In NASDALS experience, there is still interest in those NHS practices with high UDA rates, and NHS values are likely to remain steady above a certain baseline level. Even now, according to Mike Blenkharn, “as ever, good practices sell quickly!” It may be however, that with interest rates remaining high, no end in sight to workforce shortages, and the lack of any credible NHS reform plan, that the professions idea of a “good practice” is undergoing some change.
The goodwill figures used have been 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 31st July 2023. NASDAL point out all that as with any averages, these figures should be treated as a guideline only.
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