The average value of dental practices is slowly recovering, according to the latest quarterly goodwill figures from NASDAL.

Dental practice valuations have been declining from a high of 153% of fee income in October 2017.

The latest quarterly results show practice valuations are rising, from 126% to 131% of fee income in the latest quarter.

Goodwill figures as a percentage of gross fees across all practices for deals done were up 2% on the previous quarter.

NHS practices

NHS practices are experiencing an increase in average goodwill values after three quarters of reductions.

Latest average goodwill values are 149% of gross fees, up from 118% in the quarter ending 31 January.

Mixed practices also saw a rise with an average goodwill value of 146% of gross fees – up 38%.

‘The market in Scotland remains fairly buoyant albeit both valuations and deals are being done at some five to eight points less than in England/Wales,’ Cliff Fleming, partner at Condie & Co Chartered Accountants, said.

‘Banks are still very keen to lend and, in some cases, even more than 100%.

‘However, at least one of the Scottish banks have stated they will not lend to a share purchase of an NHS incorporated practice due to the potential HMRC enquiries surrounding these.

‘This is now a real issue in Scotland and there are a large number of HMRC enquires ongoing.

‘This may well have a negative effect of the goodwill value of such practices, despite there being a number of share sales coming on to the market.’

‘Big money’

Fully private practice sales were relatively steady at an average goodwill value of 120% of gross fees.

‘There are still plenty of private equity backed corporates paying big money if your practice is in the “right” place,’ Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, said.