MediEstates - The importance of evidence
The importance of evidence

When it comes to the valuation of a dental practice, there are two important reasons why it should be evidence-based.

Firstly, if a practice valuation is not evidence-based or is overestimated, it’s likely the vendor will have problems attracting interest in the sale or they will receive offers not in line with the asking price. Either way, it is probable the practice will remain on the market for a lengthy period.

Secondly, an incorrect valuation can lead to significant problems further down the line. Once an offer has been made on a practice, a bank’s final loan agreement is dependent on the valuation of the practice by an independent valuer. This ensures the valuation is in line with the proposed purchase price. Should there be an anomaly in the valuation when compared to the agreed purchase price, the bank can refuse to lend, putting the entire transaction in jeopardy.

What’s plain to see is it’s essential that valuations reflect both current market rates and attainable asking prices, and this can be achieved using evidence-based criteria to make the process as objective as possible. This is why it makes sense to enlist the support of a dedicated dental practice broker, who can help you achieve the right valuation and manage the practice transition.

Evidence gathering
A valuation is the first step in the sales process, and, before a practice comes to market, it is necessary for everyone concerned to gather a significant amount of information to ensure the valuation is realistic.

Speaking as one of a team of dedicated practice brokers, here are some of the steps we take to reach an accurate valuation:

  • We go through an earnings before interest, tax, depreciation and amortisation (EBITDA) calculation to make any necessary adjustments to the profit and loss account. This includes removing personal costs, such as claiming for personal motor expenses, and any one-off costs in a given year, such as a new IT system or treatment centre
  • To ensure an evidence-based valuation, it’s important to incorporate anticipated financial changes before they happen. For example, annual adjustments to the minimum wage and any change in the percentage of staff pension contributions an employer needs to pay. Similarly, for practices with an NHS contract that receive an inflationary increase each year, we incorporate the uplift as soon as these are known
  • For a vendor wishing to retain the freehold of the building, we compile a 16-page evidence-based report on commercial property rates in the local area to ensure the rental expectations of the owner are appropriate
  • Every practice is valued for purchase, either by an individual dentist (owner occupier), or by a group/corporate provider (associate-led). These have different operational costs and valuations associated with them, and we take account of this when determining the valuation.


To ensure an evidence-based valuation, it’s important to incorporate anticipated financial changes before they happen


The valuation multiple
Once adjustments are made to the figures, a valuation multiple is applied. To ensure this is evidence-based, there are several different factors to consider:

  • Bank valuations: with most transactions requiring a degree of bank funding, it’s important to understand how banks are valuing practices. To ensure consistency in valuations, our finance team is in regular contact with major banks’ specialist lending teams and underwriters, so we can understand the levels of lending they are willing to go up to, and mitigate any risk of the transaction falling through
  • Market data: this is invaluable when selling a practice. Our data allows us to look in detail at the practice location, then compare it with any practice recently sold in the surrounding area. This shows how many buyers were interested, the number of viewings, the level of offers received and, significantly, what multiple of EBITDA or adjusted net profit was paid for the practice
  • Benchmarking: this looks at practice performance in comparison to other similar practices nearby. This will indicate if a practice is overspending or underspending in specific areas, and we can liaise with the vendor to find the reasons why
  • Buyer intelligence: we have regular meetings with group/corporate buyers (both private equity-backed or self-funded) to understand their buying criteria based on their strategies and targets. This allows us to have a better insight of where the market is at with multiples on associate-led practices
  • Trend analysis: this refers to the monitoring of the average prices and level of goodwill for NHS, mixed and private practices across the country. It allows us to identify changes in goodwill values and regional variations to ensure our valuations stay valid in the context of changing market conditions.

For anyone looking to buy or sell a dental practice, it can be difficult to fully comprehend the intricacies and importance of evidence-based valuations. As one of the UK’s largest specialist dental practice brokers, Mediestates’ dental property experts are here to guide you every step of the way.

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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