Despite the troubles of 2020, the UK market for dental practices is optimistic about 2021, according to Christie & Co and its annual report, “Business Outlook 2021: Review. Realign. Recover.”
Two-thirds of the dental operators that the specialist business property advisor surveyed are feeling “positive” or “fairly positive” as the market continues to return to normal trading conditions. And while most respondents felt the market will need up to three years to return to pre-pandemic levels, 37.5% believe a full return will happen this year.
Christie & Co’s neutral price index movement for 2020 follows a challenging year for most dental practices and consistent increases over the past four to five years, the company said. Sentiment for 2021 is balanced between those who feel that prices will increase, remain neutral, or fall.
Despite the absence of a clear consensus on price movements for 2021, 37.5% of respondents said they are planning on selling their practice or some assets, and 22.6% said they are planning on acquiring a new business or practice or some assets. Additional market predictions include:
- A significant volume of practice sales will be completed in the first quarter in anticipation of the Spring Budget and a likely increase in capital gains tax.
- Pre-pandemic levels emphasized oral health. Christie & Co expects this reinvigorated appetite to continue as independent buyers purchase their own practices.
- Corporate buyers with ambitious buy and build targets will make up for lost time, and deal flow will increase considerably.
- Corporate buyers with ambitious buy and build targets will make up for lost time, and deal flow will increase considerably.
- Corporate buyers will continue to bid aggressively for larger practices, and there will be renewed price inflation for better quality sites.
- A greater supply of practices will come to the market from owners who put their exit plans on hold in 2020.
- Much of the market will continue to bounce back strongly. However, price corrections will affect poorer quality businesses proportionately harder as they struggle to adapt financially.
- Practices for sale that remain in a recovery stage will progress with more flexible deal structures to bridge the value gap with increased deferred consideration and longer vendor tie-ins.
“Despite the unprecedented challenges of 2020, the dental sector adjusted quickly to the shock of the pandemic and, whilst practices were closed during April and May, the profession bounced back very strongly,” said Paul Graham, head of dental at Christie & Co.
“The market remained remarkably resilient, with the majority of transactions put on hold rather than abandoned, and we’re optimistic that recovery will continue, and deals will successfully complete in greater volumes in 2021,” said Graham.
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