The Dentist Magazine.

Goodwill values – uncertainty creeps in

Published: 24/04/2017

The results of the latest NASDAL (The National Association of Specialist Dental Accountants and Lawyers) goodwill survey seem to show a market that is a little less bullish and perhaps more uncertain than it has been in recent times. 

Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, explained, “This quarter’s figures show the average of  goodwill as a percentage of fee income on those practices actually sold continue to drop back and there is a great discrepancy between valuations and deals.  I reported in the last survey that practice sales agents had told me that there was still huge appetite for practices and the withdrawal of {my}dentist would have little or no effect on the market.

“There seemed to be a general perception that the corporates, including {my}dentist, were buying up every practice across the country. Whilst this wasn’t true and {my}dentist was only responsible for a small percentage of sales, it does seem that their withdrawal may have lead to a more general loss of confidence. With a time lag between valuations and deals done, it will be interesting to see if the quarters to come will reflect the optimism of these high valuations when it comes to actually signing on the dotted line.”

NHS and mixed practices continue to attract a significant premium. In the quarter to  January 31, 2017, mixed practices sold at an average of 126 per cent of goodwill as a percentage of fee income, with NHS attracting an even higher rate of 156 per cent. Private practices have been holding steady and now attract an average 101 per cent of goodwill as a percentage of fee income. 

The goodwill figures are collated from accountant and lawyer members of NASDAL on a quarterly basis in order to give a useful guide to the practice sales market. These figures relate to the quarter ending January 31, 2017.

NASDAL reminds all that, as with any averages, these statistics should be treated as a guideline only.