Thinking of selling? Think ahead
Thinking of selling? Think ahead
With peak prices now being paid for practices, it’s valuable to have an exit plan in place.
June 16, 2022

The market for dental practices has never been stronger. We’re seeing the multiples that determine practice valuations growing bigger and bigger, with associate-led practices now standing at around 8-8.5 times profit as a baseline price. In practices of substantial size, this can even rise to around a 10 times multiple.

There are various factors affecting this, including private equity money coming into the industry from the United States. Greater levels of competition mean there’s more money in dentistry, while the last two years have seen a decrease in NHS servicing and an increase in higher-value treatments. Where previously dentists made profit passively, many are now innovating, operating their practices as businesses, and actively pursuing profit. It’s all contributing to a fairly exciting environment for practice owners.

When the time comes to sell, you’ll need to show that you’ve been trading at your current level for the last 12 months, and this means that it really pays to plan ahead. We can implement the financial systems to monitor and meet targets in order to achieve the exit that you want. Even if you’re not thinking of selling for another five years, the sooner you begin to plan and move into position for sale, the better. Buyers expect to see complete and comprehensive evidence, and in many cases, while we’ve been working with practices to gather that 12-month trail, we’ve been able to use the time to grow and improve their position.

If you’re a lifestyle practice, you might even consider becoming associate-led as a further strengthening step. Though lifestyle practices often see higher profits in percentage terms (probably because the principal is subsidising the business), the multiples they can achieve for sale are lower; and when you consider that a £10,000 profit increase for an associate-led practice can equate to another £80,000 on a sale price, it soon adds up. With time, we’ve helped to convert successful lifestyle practices with a view to sale, meaning that owners could tap into the thriving market that’s currently out there.

Whenever you’re ready to consider selling, we strongly recommend working with Christie & Co. to do so. Unlike other dental brokers, they’re RICS registered, which means that they can’t be paid by a buyer. Where these others might offer buyers the chance to pay for early access to opportunities, thereby obtaining the easiest sale (rather than the sale of highest value), Christie & Co. will work solely on your behalf to get the best possible price. They’re also our trusted advisers because we know, based on our extensive experience, that they achieve results, have an ethos that closely matches our own, and will counsel honestly on the best time for you to sell – taking you to market only when you’re ready.

If you’d like to discover more about your situation and the potential for selling, we offer a free service to evaluate your position: just get in touch to find out more.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Simon Vincent Tax Director
If you have any questions or comments about this article, please get in touch.
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