The report, ‘Business Outlook 2020: Focus on Business
’, reflects on the themes, activity and challenges of the previous year and forecasts what 2020 might bring across the sectors in which Christie & Co operates, including dentistry.
Christie & Co reports that 2019 was another buoyant year in the dental sector, with demand outstripping supply for quality dental practices across the UK, particularly in urban and suburban locations. Across the market we noted an increase in average sale price of 5.4%, with larger practices operating in the private sector growing at a faster rate than their NHS counterparts.
Further consolidation occurred in 2019 with a number of small groups acquired by medium and larger operators. Growth in the number of multiple practice owners also grew to record levels with an estimated 500 or so owners in the UK with three or more sites. Many of these are predicted to be acquisition targets themselves, as PE backed corporate operators aggressively compete for quality single practices and small to medium sized groups. Christie & Co has seen an increase in prices being paid, driven by higher multiples of EBITDA to reflect the shortage of such opportunities.
The report emphasises that a shortage of associates remains a key challenge for the profession and shapes the expansion strategies of many corporates and multiple practice owners. This has led to buyers becoming more discerning in terms of location and practice type, which has polarised demand for larger, better-quality practices in both NHS and private segments.
Looking to the year ahead, the report also outlines Christie & Co’s market predictions which are:
- Continued demand for urban locations as corporate and expanding multiple operator target larger practices, particularly those with an EBITDA of £250,000+
- A likely increase in volume of NHS practices coming to market, as sellers seek to maximise their returns ahead of the potential contract reform
- UK price increases will encourage mature dental companies of scale to target pan-European opportunities, where prices are lower and the market is less mature
Simon Hughes, Managing Director – Medical at Christie & Co comments, “The dental sector continues to grow and it’s fascinating times for those of us who work in it. With strong demand from a range of buyers and support from lending Banks, we anticipate a strong 2020.”