MediEstates - Growth in Dental Practice Values & Funding
Growth in Dental Practice Values & Funding
Demand for Dental Practices in 2017

Values for NHS and private are still on the upward curve, with London and the Home Counties values predominantly higher than the rest of the country. We have seen a spike in 2016 for the price of predominantly NHS practices in urban areas, with demand totally outstripping supply.

BUPA acquiring Oasis and {My} Dentist no longer looking to acquire at this point will not dampen the values. In 2016, the independent and small group buyer market acquired 93% of all practices sold through MediEstates. Their offers were significantly higher than the corporates could go up to, as their hands were not tied by the levels of profit multiples that could be offered.

We expect in 2017 that values will not drop as more and more buyers from home and abroad are entering the market to get a piece of the stable British Dental Healthcare Sector.

Dental Practice Loan Funding in 2017

The Movement
Historically, the lenders have had very clear credit policies on how they were able to finance clients looking to purchase within the healthcare sector. This meant they were only able support a particular type of client and/or practice. This resulted in red tape and obstacles which needed to be overcome in order to facilitate a loan. However, more recently, the lenders have been given more freedom which will benefit the sector, allowing for greater financial support.

The Evolving Sector
As such, the banks no longer have a specific ‘one size fits all’ credit policy, following guidelines rather than rigid policies allow for lending representatives to exercise their initiative, providing them with much more movement. The lenders will therefore look at each case on its own merits; really trying to push loan-to-values to 100% unsecured lending in some cases. This allows lenders to evolve alongside the expanding healthcare sector. Such movements are incredibly exciting news, as it means that the market has really opened up, providing buyers with options that in the past would not have been possible.

How we can help
The scope on lending for a practice purchase has many considerations and variables. At MediFinancial we will contact the banks and building societies on your behalf, in order to secure the best possible deal that fits with your individual requirements. We have built valuable relationships with the lenders through the years and using our expert knowledge, we are able to present your case to them in the most attractive way which results in a more positive outcome. We will provide you with whole of market research, allowing us to source the very best deal available to you through our bespoke advice.
Practice One
Practice Location -
Established over 55 years, the current principal acquired the business in 1983 as a going concern. The practice is located in a large town in the North West of England, with a prominent high street position and excellent transport links.

Type of Practice - This is a 2 surgery NHS practice with all of the income generated by the current principal. There is plenty of expansion potential on the first floor with room to create a 3rd surgery if required. The freehold premises were owned by the vendor who was flexible with regards selling or retaining the freehold.

Financials - The practice income was completely derived from the NHS contract worth £180,000 for 7,200 UDAs. Net profit margin was lower than average and could easily be improved by an incoming buyer through careful cost control.

Buyer Appetite - The practice was advertised to our priority tier buyers, with 9 viewings taking place and multiple offers being received. The level of demand amongst buyers resulted in a higher sale price being achieved.

Reason for sale / Incoming Purchaser - The vendor was looking to retire and wanted to cease working at the practice relatively quickly after a sale completed. The incoming purchaser already owned a small group of practices in the area and was looking to expand their estate.

Price Achieved - £280,000 for the goodwill, equipment, fixtures and fittings, in addition to £85,000 for the freehold premises.
Practice Two
Practice Location -
Located within a large Scottish city, this practice was first established in 1954 and acquired by the current vendor in 1990. The premises comprise a converted residential terrace close to other shops and amenities in an area of high footfall.

Type of Practice - There are 2 fully-occupied surgeries within this NHS practice, with one associate and a part-time hygienist working alongside the current principal to deliver the income. The freehold premises were to be included within the sale.

Financials - Annual turnover of £271,409 is almost exclusively generated from NHS income. The practice employs 1 full-time dental nurse alongside 5 part-time dental nurses who also cover reception duties.

Buyer Appetite - We successfully marketed the practice to our general market buyers, sending out 269 Sales Particulars to buyers, with a timely sale being achieved.

Reason for sale / Incoming Purchaser - The outgoing principal was looking to retire immediately; this suited the incoming purchaser who was a first-time buyer looking to work within the practice full-time.

Price Achieved - £491,956 inclusive of goodwill, equipment, fixtures/fittings and freehold, which was in line with the original marketing price.
Practice Three
Practice Location -
This relatively new practice is located within a coastal town in North Wales, and was set up from squat by the current principal. The practice is surrounded by other healthcare facilities in a dedicated community area within the town centre.

Type of Practice - This 2 surgery practice is fully private, with a third of the income derived from capitation and two thirds fee-per-item work. The outgoing principal delivers the majority of income alongside a part-time associate and hygienist. The freehold premises, valued at approximately £175,000, were owned by the vendor who was open to selling if preferred by the incoming buyer.

Financials - Annual turnover is approximately £475,000 with a healthy net profit of £167,000. Both establishment costs and staff costs at the practice were monitored closely to ensure the profitability of the practice was maintained going forward.

Buyer Appetite - This practice was sold on our general market with over 590 buyers viewing details online.

Reason for sale / Incoming Purchaser - The principal was looking to reduce their responsibilities and was happy to stay on at the practice post-sale, subject to agreeable associate terms. The incoming buyer was purchasing as an investment opportunity and was keen for the outgoing principal to continue working at the practice, to maintain the continuity of income going forward.

Price Achieved - £560,000 inclusive of goodwill, equipment, fixtures/fittings and freehold.
Posted by: Dean Barker on

General Buyer Terms 

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 2018. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
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