Determining the “fair market value” of a dental practice is requires more than just looking at the previous year’s turnover. In the current market, buyers and lenders are looking for stability and potential.
Key Valuation Drivers:
- Income Type: NHS, private, and mixed practices are valued differently. While private practices often command higher goodwill multiples, NHS contracts offer a guaranteed income stream that banks find highly “bankable.”
- EBITDA: This is the “gold standard” for valuation. Earnings Before Interest, Taxes, Depreciation, and Amortisation
toprovide a clear picture of the practice’s true operating profit.
- The “Principal Dependency”: The saleability of the practice may be influenced by whether it relies entirely on your personal reputation and clinical skill or has associates or an associate led practice.
- Compliance and Equipment: A practice with an excellent CQC history and modern, digital workflows (like AI-assisted charting) will always attract a premium.
Jacobs Legal’s Tip: To get the best price, start “cleaning up” your records 12–24 months before you intend to sell. This includes formalising associate agreements and ensuring all compliance folders are up to date.