NASDAL Goodwill Survey results – the bottom of the market?
NewsPosted by: Dental Design 22nd November 2024
This week saw the release of the latest statistics from NASDAL (National Association of Specialist Dental Accountants and Lawyers) and its quarterly Goodwill Survey. The survey covers the quarter ending 31st July 2024 and includes data on valuations as well as deals completed (i.e., practices bought or sold by NASDAL members’ clients in the period).
The quarter ending 31st July 2024 saw another drop in overall goodwill values – now at their lowest level since 2018. Overall, goodwill values were at 113% as a percentage of gross fees – down from 124% in the previous quarter. NHS goodwill values stayed reasonably steady at 129% of gross fees – just slightly down from 134% in the previous quarter. Private practices fell from 119% as a percentage of gross fees to 111%. The big drop was in the goodwill value of mixed practices – previously at 131% as a percentage of gross fees, they fell to 107% in the quarter ending 31st July 2024.
“A confident market returning”
Mike Blenkharn, Partner and Head of Dental at UNW LLP who compiled the goodwill survey commented, “From a positive point of view, I don’t expect the market to fall any further. It has to be remembered that the completions are reflecting deals that were done probably 12 months ago. If we think back to August 2023, we had higher interest rates and banks were being very conservative with lending in terms of affordability.
If we move to where we are today, inflation is under greater control, base rates are moving in the right direction and banks are keen to lend. I am seeing a confident market returning and it is a good time to buy.
Following the budget, I don’t expect the CGT rise to lead to a huge increase in deals though – if a practice wasn’t on the market before the budget, it is unlikely to be able to complete before April 2025! It may speed up those transactions already in process though.”
Johnny Minford, Commercial and Development Director, DJH Mitten Clarke and NASDAL Media Officer added, “The fall in values is following a trend, and instability always causes weakness. There remains some economic uncertainty. There will be some local fluctuations as always, and we expect to see some frantic activity around the capital gains tax change deadlines, as sellers rush to achieve lower rates. However the reasons to own a dental practice haven’t changed, and we will continue to see solid, profitable practices attracting interest.”
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 31st July 2024.
NASDAL reminds all that as with any averages, these statistics should be treated as a guideline only.
