Abi Greenhough, a Director at Lily Head Dental Practice Sales shares her insight on the possible effects of Covid 19 on #dental practice valuations – April 2020.
I don’t think we can accurately predict what the effect on dental practice valuations will be of the current pandemic. This is because sale prices (£) are influenced by market confidence/demand and the lender appetite.
One of the foundations of an accurate dental practice valuation are comparable sales data.
Right now there is only data that was captured prior to the current pandemic.
At Lily Head Dental Practice Sales we have had two deals agreed since the lock down and this was based upon pre Covid 19 market conditions.
But there are some things that we do know.
- Lenders and their purchasers will want to see income restored to provide evidence profit will service the debt and provide income to the new owner.
- More practices will come to market as owners have time to reflect on their short term and medium-term goals.
- Provided income restores to usual levels, the monthly revenue during the corona virus shut down will be excluded from the ‘test period’ and valuation – thus removing the effect of any shutdown.
- Heavily NHS and membership plan practices will fare better in terms of cashflow, so following this period of distress may be more attractive. This could push up their demand.
- Interest of buyers still exists, their ambition to own a practice is still there – but many are taking a ‘wait and see approach’.
- Dentistry fared well, compared to other sectors in previous recessions.
As we learn more we will share that with you.
If you wish to share your own experiences and insight then please ‘Contact Us’.
Stay Safe, be kind & keep smiling.
