MediEstates - What's driving up goodwill values?
What's driving up goodwill values?

What's driving up goodwill values


Dean Barker explains some of the reasons why the UK private sector is experiencing exceptional growth in goodwill values and how this is affecting practice valuations when the time comes to sell

We are currently witnessing a marked change in buyer behaviour with dentists showing an increasing desire to invest into the private market.

During the 2015 to 2017 period, according to Mediestates’ own data analysis, around 22% of buyers were interested in purchasing a private practice, and in the first nine months of 2018, this figure rose to an astonishing 52%.

What is driving this appetite?
The reasons for this rapid growth are varied. However, it is certainly linked to the uncertainty associated with ongoing NHS contract reform.

While private practice income remains steady, the ongoing deliberation around the transition of NHS contracts is leaving many dentists worried that the process will ultimately bring about a reduction in UDA rates. If this should happen there will be a consequential reduction in practice profitability, a risk that many practice owners are unwilling to take.

Concerns around the unpredictability of Brexit are also playing a key role in the direction the practice market is taking.

No one can accurately forecast what Brexit will bring, yet we can be sure that the knock-on effects will be felt for a very long time.

We are already seeing EU dental professionals working in the NHS planning to return to their home countries after Brexit. Even fewer are now coming to the UK looking for work, which could mean potential problems for recruitment and contract fulfilment. On a more positive note, the growth in the private sector is also linked to favourable lending by the banks in two notable areas:

  • 100% lending is available in special circumstances – for the purchase of an established and profitable business by a buyer who already owns one or more practices with a proven financial track record
  • The private element of NHS practices improves ‘lendability’ by demonstrating a practice’s potential for growth.

Private growth
Mediestates is increasingly seeing large NHS practices looking to diversify into the private, specialist or cosmetic sector. This facilitates the building of private revenue, which supports the transition into a mixed practice.

Increasing private treatment in this way brings immediate and significant additional income into the business, which ultimately nullifies the multiple that has been paid for the practice in the first instance. This in turn increases the market value of the practice without the new owner having to pay for the private goodwill.

There has been a significant shift towards investment in the private sector over the past five years, with corporates and large group practices engaging heavily in this area. While some of the larger corporates are looking to buy only large private practices, or practices with at least 40% private income, some of the smaller groups are increasingly interested in buying solely NHS practices with a view to building the private element of the business from scratch, resulting in a big increase in private goodwill in the coming years.

Onwards and upwards
A competitive corporate market sees dentistry as a desirable long-term investment opportunity, an attitude that is driving goodwill values even higher.


We will see continued growth throughout this year and on into the foreseeable future


Mediestates’ constant analysis of the dental market has shown a strong 20% growth in private practice goodwill between 2014 and 2017, and following a buoyant first six months of 2018, it is expected that we will see continued growth throughout this year and on into the foreseeable future.

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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