Goodwill valuations and deals have dropped in the last quarter, according to the latest NASDAL goodwill survey.

Figures show goodwill valuations have dropped for both NHS and private practices.

NHS goodwill valuations dropped to 177% of gross fees, while private valuations dropped to 104% of gross fees.

‘In Scotland I would say that the deals and valuations gap has narrowed albeit sales of practices have in recent times been done at below valuations due to the valuation gap being too great,’ Cliff Fleming, partner at Condie & Co Chartered Accountants, said.

‘We certainly did not see the excessive valuations/deals witnessed in England towards the end of 2017.

‘The market continues to be buoyant and associates are still keen to buy.

‘Generally, principals are not keen to sell to the “corporate” market.

‘We await any effect Brexit may have on the associate market and also the effect of HMRC’s current campaign on whether associates are truly self-employed – both could affect valuations!’

Valuations plummet

Over the past year practice valuations have plummeted from a high of 153% of gross fees.

The percentage of deals carried out has seen a more gradual decline, dropping from 137% of gross fees.

‘There is ever increasing private equity interest in acquiring larger practices, or small groups,’ Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, said.

‘A new entrant to the market is Apposite Capital, which has invested in “Riverdale Healthcare”.

‘They recently bought the “Alpha Vitality Group” in the north east.’