A changing market

Since the introduction of the new National Health Service dental contract in 2006 the market for dental practices has been extremely buoyant, with almost any premises featuring a dental chair attracting interest from potential purchasers. The natural consequence has been valuations with little or no genuine relation to the size, type, structure or profitability of the business.

In recent months a number of factors have coincided to encourage a more realistic approach, including a more stringent lending environment, with lenders often demanding a cash contribution or outside security as well as being persuaded by a sound business plan, the requirements of HTM 01-05, and the implications of Care Quality Commission registration for the provision of private dentistry.In spite of this evident tightening in the market, figures from the last quarter of 2010 and into 2011 suggest the demand for practices which benefit from existing NHS contracts remains strong, although the medium term future for NHS practices is clouded by some uncertainty as changes are about to be piloted in the structure of new NHS dental contracts. While the impact of abolishing the PCTs in favour of a central commissioning authority cannot yet be measured, prospective purchasers appear to remain confident that an NHS contract will at least furnish a stable and sufficient income stream to allow practices to remain profitable.