NASDAL Goodwill Survey – valuations drop back
The latest statistics from the NASDAL (The National Association of Specialist Dental Accountants and Lawyers) Practice Goodwill survey have been released.
The survey shows that practice valuations have fallen back sharply in the quarter ending January 31, 2018. Deals done have remained steady with an average goodwill value of 137 per cent of gross fees – up just one percentage point from the previous quarter. However, average valuations fell back sharply to 136 per cent of gross fees from 153 per cent. NHS practices are still attracting a significant premium with an average goodwill value of 152 per cent of gross fees, whereas private practices see a figure of 123 per cent of gross fees.
Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, said, “Practice sales goodwill values are becoming increasingly difficult to predict. Geographical factors seem to be becoming increasingly important, and this links with a similar pattern in associate availability. Alternatively, perhaps the latest quarter could indicate that an era of high, perhaps inflated valuations may be coming to an end. It will be interesting to see if the deals done figure falls back in the next quarter, as if it does that would suggest a more general reduction in practice sales values.
“There does seem to be a real problem for many practices in recruiting associates leading to them having to pay higher remuneration. Added to the fact that some practices are missing UDA targets, and the NHS contract landscape is uncertain, it would not be unreasonable to suggest that goodwill values could fall back somewhat. ”
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, 2018.
NASDAL reminds all that as with any averages, these statistics should be treated as a guideline only.