The evolution of the dental business market
What did the dental business model look like when you first came into dentistry?
AB: The business model of UK dentistry looked very different two decades ago. When I set up my first business, MediCruit, back in 2001 the market was in the early days of fledgling dental corporates which were looking to buy dental practices and recruit staff.
The internet was in it's infancy and companies offering specialist services across the dental spectrum, such as practices sales, staff recruitment and practice funding barely existed.
Dentistry was a 'profession' in the traditional sense of the word and as I gained more experience in the market and got to know the people I sensed there needed to be a shift in attitude. Although not everyone could see it at the time, dentistry was actually on the verge of a major revolution.
What were the major drivers for changes in the dental market at that time?
AB: Corporatisation, increasing competition and the move towards the private sector were all important factors in bringing about change and slowly, practices started to recognise the need for diversification to stay ahead of the game. With the rise of corporate dentistry, increased competition meant the buying and selling of dental practices was regarded as something of an investment opportunity, attracting private equity groups which bought up practices at an astonishing rate. At the same time GDS contracts were being finalised, giving security to dentists and this combination of factors resulted in a spectacular increase in goodwill values.
Is the market for dental practices still as buoyant today?
AB: The days of creating a practice or group that could be sold at a profit within a relatively short turnaround time have gone and individual dentists, corporate and group practices are increasingly seeing dentistry as a long-term investment opportunity. The market for buying and selling practices continues to evolve and the pattern of ownership, especially of group practices and mini-corporates, looks very different from that which existed even two or three years ago.
We are currently seeing buoyant growth in the mid-market sector backed by private equity, because group buyers have correctly identified the benefits of a high return on investment versus the minimal risks associated with owning a mid-market practice. A mixed practice with a secure NHS contract in a good area for recruitment is really a fail-safe business and, in my opinion, it will continue to be so whilst there are remains guaranteed income via NHS dentistry from central government. Even with the pending new contract funding is still likely to be secure, making good NHS practices an attractive proposition for this segment of buyers.
As a result, interest around buying and selling practices, both for investment and professional reasons has grown and decisions around how to fund a practice purchase, or understanding how practice valuations are calculated, has become a topic of interest for dentists. I always maintain that whether you're a vendor or a purchaser it's important to get the best deal you can and that's where the advice of specialists can be so valuable.
From a business perspective, what do you believe is the future for dentistry now?
AB: As in any business, in dentistry you cannot afford to stand still for any length of time. I'm seeing more of today's dental practices looking to diversify, moving away from the more traditional family practice model, into the private, specialist and cosmetic sector, which, despite recession and economic uncertainty, remains a hugely attractive area. Corporate dentistry remains a major and influential player and increasingly mid-market buyers - micro corporates and smaller groups - are looking to acquire strategically positioned practices in prime locations.
Practice owners always want to maximise values and purchasers need to be confident that what they buy represents good value, not just in the short term, but for many years to come. That is why we think it is important to provide a bespoke service to those looking to buy or sell a dental practice, while also helping them to recruit the best staff to ensure their business is a success.