NASDAL Goodwill Survey – valuations drop back

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.