You want to sell your dental practice? Then it's good to know what the acquisition market in the dental practice field looks like. Due to a shortage of newly trained dentists and the fact that new generations prefer to work within a partnership, there will be a succession problem in the coming years.
The dental industry is facing a challenge, given the succession issue. Due to the (upcoming) aging of dentists and the relatively low number of new dentists, matching supply and demand in the dental practice acquisition market could become more difficult in the coming years.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
In the healthcare and pharmaceutical sector - to which a dental practice belongs - an indicative EBITDA multiple range of 5.9 to 6.9 is currently used, according to the Brookz Acquisition Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Want to buy a business or sell a business in the healthcare & pharmaceuticals sector? With this Brookz Sector Monitor, we want to present buyers and sellers with facts, figures and an outlook that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in healthcare & pharmaceuticals. Because in every buying or selling process, thorough preparation gives peace of mind, overview and structure.
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In the medium term, according to Rabobank, the size of the dentist's practice is changing because of a scaling up of activities. Where the dentist now largely runs a practice alone with two chairs, group practices with several oral health specialists will emerge in the coming years. These practices will consist of three to eight chairs, with services being expanded to include new techniques such as 3D printing. In addition, the number of branches of chains will increase.
In figures, the number of dental practices in 2024 looked as follows(CBS):
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A number of trends and developments will inevitably cause changes in the coming years, but also offer dental practices many growth and acquisition opportunities:
People want to keep their own teeth longer and longer, so product innovations such as better implants and crowns are becoming more common. Process innovations, such as task delegation to dental hygienists and prevention assistants, offer opportunities to continue to treat more clients with fewer dentists. With further expansion of tasks, this will have a positive impact on the shortage of dentists.
There is more and more cooperation, according to trade magazine QP Dentistry. Not only dentists among themselves, but also with dental hygienists, prevention assistants and other oral care providers. As a result, practices have also become larger on average, at least in terms of patient volume. In relation to this, a specific form of practice has emerged in recent years: practices united in a chain.
Among dentists, chain formation is on the rise. On the one hand because it allows for more professional work, cheaper purchasing and a wider range of treatment. On the other hand because of succession issues, also recognizes industry association Royal Dutch Society for the Advancement of Dentistry (KNMT). New dentists have been trained in limited numbers and new generations prefer to work within a partnership rather than solo.
Given the limited number of training positions, aging dentists, increased demand and expansion of activities, there will be a shortage of dentists. Therefore, competition among dentists is very limited, which cannot translate into higher margins due to the maximum prices set by the Dutch Healthcare Authority (NZa).
An aging population is causing a changing demand for care, according to ABN Amro. Preservation of one's own teeth is becoming more of a priority, reducing demand for full or partial dentures.
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