The first national lockdown, in March 2020, led to an instant and dramatic reduction in dental market activity but, as the profession slowly came to terms with the pandemic and the path to reopening practices became clearer, buyers tentatively re-engaged and, despite this challenging period, Christie & Co successfully completed on over £8,250,000 of dental practice sales, all of which had a significant NHS element.
The lockdown period caused some surprising trends, such as an increase in enquiries from first-time buyers and an uptick in their age profiles which suggests that more experienced Associates were looking for greater security through practice ownership. It is also interesting to see the company report, during a period of market uncertainty, that the average time from launching a new instruction to an offer being accepted reduced from the prior year, from 12 weeks in 2019 versus 10.5 weeks in 2020. This could be due to vendors more readily accepting early offers in what were more challenging market conditions during the middle part of 2020.
Strong recovery from July onwards
Christie & Co interviewed a cross-section of corporate and independent operators to find out how they adapted to the huge challenges of last year, and to gain insight into how their businesses have fared and their sentiment for the year ahead. The company found operators to be pleasantly surprised at the speed of recovery in demand for private dentistry, which could be attributed to several factors, not least a heightened awareness of personal appearance from video calls which has led to a surge in demand for cosmetic and aesthetic dentistry, social orthodontics and implants.
Operators also reported that some NHS patients were electing to receive private treatments as a result of lengthening waiting lists and appointment times.
When asked how the pandemic has impacted the economics of dentistry, 35 per cent of owners said they now have higher private revenue than before COVID-19, confirming the very quick bounce back from June 2020 when practices re-opened. When compared with Hygiene income, however, over 80 per cent stated that revenue is less than 50 per cent recovered, reflecting the continued challenges of operating with restricted patient numbers.
Positively though, 85 per cent of owners questioned believed that revenue will have fully recovered by the end of Q2 2021.
Recruitment challenges likely to remain
The shortage of quality Associates has been one of the key challenges in recent years and, before the pandemic, had led to a highly competitive recruitment environment and increased Associate costs.
The closure of dental practices in March 2020 led to an instant shift in the supply and demand dynamic as many Associates in private practices sought the security of the NHS and there was, for a short while, a surplus of Associates. This seems to have been short lived and, as practices re-opened and private dentistry recovered quickly, the same pressures on recruitment have returned to certain UK locations.
Rapid market recovery
Though there was undoubtedly market upheaval in 2020, sale prices have held up well, with pre-COVID-19 levels of demand returning in 2021 for quality practices. Interestingly, there was a marginal increase in the average multiple (a key measure of value) paid for larger practices, in contrast to the average multiple paid for owner/Principal led practices which reduced slightly.
Encouragingly, deals were struck at an average of 103 per cent of asking price in the post-lockdown period with no significant adjustment, compared with an average of 105 per cent of asking price in Q1 2020 which confirms that demand for practices across the board returned quickly.
The report concludes with the analysis of the dental market funding landscape by Christie & Co’s sister company, Christie Finance
, which provided circa £4,000,000 of unsecured loans and asset finance to its dental clients in 2020, with a mean average deal size of £160,000. The business finance specialist said that, though most banks took a pragmatic approach and continued lending to the dental sector, lenders are now more cautious, and the pandemic has encouraged them to look even more carefully at finance proposals.
Paul Graham, Head of Dental, Christie & Co, “We are delighted to be publishing our latest Dental Market Review which, for the first time, includes opinion and valuable statistics from a range of corporate, group and independent practice owners. It’s encouraging that sentiment is so positive, and dentistry has weathered the COVID-19 storm so well to date.”
David Ward, Senior Director – Head of Medical, Christie Finance, comments, “Funding for dentists during the COVID-19 period has been challenging, but manageable. Lenders have tweaked their policies, but we are still very positive about dental funding in 2021. Our new Dental Market Review is an essential report giving a truly up-to-date opinion of the dental market from all angles and I think that owners, sellers, buyers, lenders and advisors will all find the information extremely useful.”
To read the full ‘Dental Market Review 2020/21’ report, click here: https://www.christie.com/news-resources/publications/march-2021/dental-market-review-2020-2021/
For further information on this press release, contact:
, Corporate Communications Executive
P: 020 7448 8849 or E: firstname.lastname@example.org