As we come to the end of another busy year Lis Hughes, Managing Director at Frank Taylor & Associates, reflects on some of the changes we have seen in the past twelve months….
Associates and Principals
Associates continue to want to buy practices and we have seen a consistent increase in registrations over the year, this time last year we had just over 5,000 dentists registering an interest in buying a practice and this has remained a stable figure throughout the year.
We have continued to see the lack of good quality associates which is reflected in the fees associates have been able to achieve. On average we now see an associate achieving 50% on private fees and between £11 and £11.50 per UDA, which can affect the profitability of a practice.
Interestingly, some associates we speak with are re-considering their options on buying practices as they see the opportunity to earn more as associates.
We continue to see most principals wanting to release themselves from the burden of practice ownership and continue their career where they can focus on the clinical work.
There has been a steady increase in the number of new corporate bodies enter into the market place, some with considerable capital to spend! And there is a significant increase in the number of associates who are forming their own small groups to buy practices. The more interest there is in practice ownership the more choice our sellers have as to who to sell their practices too.
We have seen a surge of interest in private practices, particularly as there continues to be uncertainty about the impact of the proposed revisions to the NHS-GDS contract. The good news is the tender process for Orthodontic contracts is now well underway and I am sure we will see a number of NHS orthodontic practices come to the market during the latter part of 2019. We continue to see the aspiration of many associates to move away from NHS Dentistry, particularly as a well-run private practice can be incredibly profitable and banks appreciate the value of a regular income from a capitation scheme.
Banks are continuing to lend to dentists and dentistry is still considered a very safe option for banks. For buyers the temptation is to stay with their existing bank, however, working with an independent business advisor can really save you money as banks once they realise they have competition will often provide a far more competitive rate.
Banks appear to require even more due diligence and sellers really have to be able to provide substantial information to any buyer and this is often the biggest delay in any sales transaction – our advice is to start collating the due diligence as soon as you are ready to put your practice to the market, as that way you can spread the pain of collating the information.
The Year Ahead
Practice goodwill values continue to be strong and whilst there is little evidence of a down turn in demand, we are certainly not immune to the impact of Brexit on the confidence of the market.
CQC regulation is now firmly established and currently we are working through changes to the existing application process. We provide a totally free CQC service for both buyer and seller and even if you are not using our services, we are happy to provide you with information about this process.