Sensible pricing – NASDAL Goodwill Survey results
NewsPosted by: Dental Design 15th September 2023
This week saw the release of the latest statistics from NASDAL (National Association of Specialist Dental Accountants and Lawyers) and its quarterly Goodwill Survey. This survey covers the quarter ending 30th April 2023 and includes data on valuations as well as deals completed (i.e., practices bought or sold by NASDAL members’ clients in the period).
This quarter saw a market that is continuing to do well. Goodwill values stayed steady at 151% as a percentage of gross fees – very similar to the 156% of the previous quarter. However, NHS practice values did appear to fall back sharply with values of 133% as a percentage of gross fees – down from 163% in the quarter ending 31st January 2023. We will watch to see if this becomes a trend with interest. Indeed, values for private and mixed practices in this quarter were almost identical to the last – 145% and 160% respectively versus 143% and 162% in the last quarter.
There was a big rise in valuations – 175% as a percentage of gross fees compared to 116% previously. Valuations are not done deals though so it will be some months before we see whether this has translated into real returns.
“Sensible pricing”
Johnny Minford, Principal of Minford Chartered Accountants and NASDAL Media Officer commented, “The practice sales market is still in good health. Profitable practices are selling and we have seen what I might consider to be more sensible pricing in recent months. The number of interest rate rises has possibly brought values down a touch but the longer term effect of this in bank lending is yet to be fully seen so we will see if this means higher values in the months to come.
“One phenomenon of note is that of the ‘Associate-led practice’. I have seen a number of practices marketed in this fashion as if the new buyer and Principal will have nothing to do? All good practices need motivated team members and Associates but also need considerable time and thought from the owner too.”
The goodwill figures are collated from accountant and lawyer members of NASDAL in order to give a useful guide to the practice sales market. These figures relate to the quarter ending 30th April 2023.
NASDAL reminds all that as with any averages, these statistics should be treated as a guideline only.
