How buoyant is the dental acquisitions market?
Following the ups and downs of the last 18 months, it’s understandable that there may be some uncertainty in the minds of dentists surrounding the state of the dental acquisitions market. But how has the market changed during this time and is it currently buoyant? One of the most common questions that brokers are asked by dentists is whether the acquisitions market is healthy, so it’s a good idea to look back on how recent events have shaped the market of today to better understand where we are now.
The post-pandemic market
2019 was a record year for practice acquisitions. However, once Covid broke out in the early months of 2020, this had an instant impact on the market. Practices were unable to open from March to June, and this created a lot of wariness surrounding any potential sales as there was no way to measure real-time business profitability. Plus, there were physical barriers to selling during this time – people were either unable or unwilling to view properties in person, and there was no way of telling how the pandemic would progress and what effect this would have on the dental industry as a whole.
However, the market did begin to recover in June once practices opened their doors again, and since then some interesting trends have emerged in 2021 that are dictating current market performance. For example, for private buyers (as opposed to corporates looking to expand their businesses) properties in more rural areas have become more appealing and are therefore worth more. One factor fuelling this is that many potential patients are moving out of large cities and into these areas now that working from home has become possible. That’s not to mean that city locations aren’t extremely popular, and with interest from both corporate and private buyers, the market is booming across the country. We have seen a 44% increase in buyers registering in 2021 compared to 2019.
Covid has impacted how patients seek care, and as NHS waiting lists grow and more people head towards private dentistry, this too has bolstered the worth of practices that provide private services. Patient demand for cosmetic procedures and more expensive treatments such as dental implants have also increased during this time, enhancing the profitability of practices that provide these modalities. This has also opened up new opportunities that dentists can seize to impact the overall worth of their practice before selling.
The entrepreneur dentist is now increasingly interested in owning multiple dental practices, and building a group on the foundation of patient care and education rather than mere profitability.
Measuring market buoyancy
One way to measure market buoyancy is to see the multiple (share price) that is being applied to practices by brokers during the selling process. This figure is dictated by factors such as size, location, and services offered, but is also driven by demand. For example, say a practice in Norwich has a multiple of 7.5. Interest from multiple buyers would increase the sale price as these buyers would be in competition, which would also increase the multiple. This information is used by brokers when valuing similar practices in the area, dictating the value of practices in the area. With cases such as the above happening on a regular basis, it’s safe to say that the market is extremely resilient right now, and that the current landscape presents a great opportunity for those looking to sell.
Enlist help from the experts
With years of experience behind them and a constant finger to the pulse of the dental acquisitions market across the whole of the UK, the team at MediEstates offers dental practice valuations, dental practice sales and much, much more. Keeping track of the trends and using high-quality comparable data, they help both buyers and sellers to understand the complexities of the market and provide expert impartial advice to all. So, when it’s time to sell your dental practice, you can rely on help from the experts every step of the way.
By Scott Gidman
For more information, contact MediEstates on 01332 609318 or