Practice values heading downhill?

The well-informed phone call on Friday afternoon, to tell me that ADP were no longer buying practices (because they were funded by Kaupthing Bank) has yet to be verified by the dental press, although I have had one email from a dentist this morning indicating the same news.
If accurate, I suspect the effect on the market for acquisition could be dramatic – in the sense that a group of “nearly sold” practices may appear, all currently owned by principals who were looking forward to a cheque and a reduction of stress levels.
I’ve worked with many clients who have sold their practices over the years – and observed that in the three months between a heads of agreement and final sale, the principal has often spent and invested the proceeds many times over in the mind – including, perhaps, a well earned holiday.
Imagine the disappointment and uncertainty that might have set in over the weekend?
Add together the arrival of a portfolio of the “nearly-sold”, the chagrin of any sales agents who were looking forward to a commission or principals who were looking to reduce their borrowings, the general lack of liquidity in the market-place and the “even-worse news” that’s supposed to break tomorrow (a number of economic commentators are predicting a Black Tuesday on 14th October) – we seem to have a recipe for what George W. would call “an adjustment” in market prices for dental practices.
I’ll be watching this very closely over the next few days as it will impact my current activity – in fact, today I have a desk day, feeding sets of accounts into a valuation model that we have developed for private practices to see what offers we will be making to the first potential acquisition candidates.
Our own funding is secure, barring anarchy – and so it will be business as usual.


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Chris Barrow

Chris Barrow has been active as a consultant, trainer and coach to the UK dental profession for over 20 years. As a writer, his blog enjoys a strong following and he is a regular contributor to the dental press. Naturally direct, assertive and determined, he has the ability to reach conclusions quickly, as well as the sharp reflexes and lightness of touch to innovate, change tack and push boundaries. In 2014 he appeared as a “castaway” in the first season of the popular reality TV show “The Island with Bear Grylls”. His main professional focus is as Coach Barrow, providing coaching and mentorship to independent dentistry.