Pluto Partners view of the current dental market
The activity across dental practice sale remains strong in the U.K, with a particular increase in activity and prices paid in the Midlands and the North West.
The driving factors behind this current trend are that the market in those area is less saturated than in London and the South East, the supply of opportunities is higher than anywhere else and property prices are generally more affordable. The average UDA value is also higher than it is in other parts of the Country, providing healthy profit margins.
The busiest buyers are still multi sites owners, larger groups and now also foreign based investors are making a strong entrance, generating a positive confidence in the industry. First time buyers with financial support from family are also strong contenders in the dental practice market.
Some of the largest groups appear to be on the road of resolving the recruitment issue, with more associates ready to start working for them, however there is still the issue of recruitment in hard to reach locations that is a growing challenge for some small operators and single site owners.
The majority of buyers are still looking for practices in London and the South East area, whilst some others started thinking outside of the boxes and going against the trend, also investing outside of their search criteria and deciding in a lifestyle purchase and relocation, or commuting when possible.
EBITDA Multiple 6.5 6.7 6.2 3.9 7.1
Practice Average Associate Led NHS Dental Practice EBITDA Multiples Average Associate Led Mixed Dental Practice EBITDA Multiples Average Associate Led Private Dental Practice EBITDA Multiples Average Associate Led 1 chair Dental practice EBITDA Multiples Average Multiple paid for Dental Practices with 7 or more chairs and >£250k EBITDA
The UK dental market is highly fragmented with c.15% of practices in the UK owned by corporate dental bodies. Despite recent consolidation in the market, the sector remains ripe for further consolidation activity.
With c.40% of dentists in the market less than 45 years old, more dentists retire or sell their dental practices to become independent contractors, whether due to the administrative, regulatory and compliance burden of owning their own dental practice.
The Carlyle Group and Palamon Capital own the largest dental chain in the UK, Mydentist, which was formed in 2011 and owns over 650 practices, with over 2,500 dentists. Colosseum Dental Group, based in Zurich, owns c.260 practices across 8 Countries. They are in the U.K. after the acquisition of Southern Dental in April 2017. CDUK (Colosseum Dental UK) own 80 sites on the SE of England.
In May 2017 Dental Partners was founded following the acquisition of Genesis Dental Care and they now acquired several more practices, with the total number being c.30 practices. In 2013 Bridgepoint bought the number two chain, Oasis, and sold it in 2016 to Bupa who previously entered the UK dental market in 2014 when it bought Barbican Dental.