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How much does a dental practice sell for?

Posted on January 20, 2021 in Articles & Frank Taylor & Associates

There is no standard for what a dental practice sells for. There are over thirty factors that need to be considered when assessing the goodwill value of a dental practice.

The key determining factor on how much a dental practice will sell for is the location. A dental practice located in a large city or town will be among the most desirable, with a larger pool of interested buyers, and a such will command a higher value. The simple economic rule of supply and demand applies here.

The upper and lower range of what a dental practice will sell for is set by the location then other elements come into play. The income type (NHS, private, plan based or mixed), dentistry type delivered (general, orthodontics, periodontics etc.), financial performance (gross fees, core costs, net profit and EBITDA).

The next tier of consideration when working out how much a dental practice will sell for is the property tenure, stability of the team, marketing techniques and quality of the practice facilities. All these elements add up and will influence the goodwill value calculated for each practice on a bespoke basis.

Ultimately a dental practice sells for what someone is prepared to pay for it. At the bottom end a dental practice in the UK could sell for a multiple of the adjusted net profit (similar to EBITDA) of 1x and upwards of 9x for a highly desirable practice with a strong demand. As you can see the range is huge which is why anyone keen to understand what dental practices sell for does some specific research on the area and practice type they are interested in. Using averages or comparable data which isn’t relevant for the target area can produce information which is misleading and can result in a bad decision being made.

At present the demand for dental practices is high. As a result of this high demand, partly driven by the Covid pandemic, goodwill values are at historically high levels meaning that dental practice are commanding high prices. There is no sign of this situation changing.

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