Practice purchase & sale
Practice valuation, sale preparation and buy-side due diligence
Whether you are selling, buying, bringing in a partner or thinking about a corporate exit five years out, the valuation work is the same: normalised EBITDA, goodwill methodology, asset list, contract review, tax structure. The right number is the one that holds up under buyer due diligence.
How dental practices actually get valued
There are two common methods. Earnings-based valuation multiplies normalised EBITDA by a sector-and-region-specific multiple. Percentage-of-fee-income applies a percentage to the gross fee income. Some buyers use a hybrid.
Indicative 2025/26 UK dental ranges: roughly 0.6 to 0.9 times normalised EBITDA for NHS-heavy single-handed practices in lower-demand regions, roughly 0.9 to 1.2 for mixed multi-surgery practices in normal-demand areas, and roughly 1.1 to 1.4 for private-focused practices in high-demand regions, with corporate strategic premiums capable of sitting above that. Treat each as a range and date-tag it, because they move. A specialist from our partner network models both methods and reconciles them.
Goodwill typically represents 60-80% of the total practice purchase price. Tangible assets (chairs, lights, X-ray, compressors, sterilisation) make up the balance.
Normalising EBITDA before the buyer does
Buyers will normalise the seller's EBITDA. They will strip out the principal's drawings (replacing them with market-rate principal cost), the practice manager who is actually the principal's spouse on above-market pay, the personal expenses that ran through the business, the one-off goodwill amortisation from a previous buy-out.
Normalising first means the seller knows the realistic figure and the buyer is not the one delivering the surprise. Common normalisation adjustments:
- Replace principal drawings with market-rate principal salary + dividend equivalent
- Adjust spouse salary to market rate for the actual role performed
- Strip out one-off items: COVID restart, equipment refresh, premises buy-out costs
- Add back amortisation of goodwill from previous acquisitions
- Strip out personal use items (vehicles, subscriptions, family-related expenses)
- Normalise rent to open-market value if the principal owns the premises personally
Tax planning before a practice sale
BADR (Business Asset Disposal Relief) is the lever that matters, and its rate has moved twice. It was 10% to 5 April 2025, 14% for disposals from 6 April 2025 to 5 April 2026, and 18% for disposals from 6 April 2026. The £1m lifetime limit per individual is unchanged. Note also that the date of disposal for CGT is the date of the contract where that contract is unconditional, not completion, so the exchange date can decide which rate band a sale falls into.
BADR eligibility requires the qualifying conditions to be held throughout the two years to disposal: a trading business or company, and for a share sale 5% of ordinary share capital and 5% of voting rights plus officer or employee status. That is worth checking around 24 months out rather than in the week before completion, because the two-year clock cannot be shortened. Correcting a structure late does not shorten the period; it moves the earliest date you can sell with the relief in hand.
If you are still unincorporated, Section 162 incorporation relief can defer CGT on goodwill when you transfer the whole unincorporated trade to a company in exchange for shares. This is sometimes a sensible move before sale, sometimes not, and it needs modelling on your numbers first.
Buy-side: what to ask the seller before you sign
The risk on a first purchase is attachment. Once a buyer has decided this is the practice, diligence quietly turns into confirmation. The questions below are the ones that are awkward to ask in that frame of mind, which is exactly why they belong on a list written before you view anything.
- Three years of accounts plus the latest management accounts
- NHS contract documentation, including the most recent UDA reconciliation and any contract variation letters
- Associate agreements (all of them, current and recent past) with the fee splits and notice provisions
- Lease or freehold documentation, with planning consent for D1/E-class use
- Equipment inventory with age, service records and remaining useful life estimate
- Patient record system audit (PMS export, recall compliance, treatment plan completion rates)
- Compliance documentation: CQC registration, CQC inspection history, radiation reports, employment contracts, GDC registrations of all clinical staff
Frequently asked
- How long before sale should I start planning?
- Realistically 24 months. BADR eligibility hinges on two years of qualifying conditions, and pre-sale normalisation work (taking spouse salary back to market rate, cleaning out personal expenses from the P&L, regularising associate agreements) needs at least 18 months to show in the accounts that the buyer will see.
- What's the difference between asset sale and share sale?
- Asset sale: the seller's company sells specific assets and goodwill to the buyer. Share sale: the buyer acquires the seller's company outright, and the NHS contract stays inside the company rather than needing novation with commissioner consent. The trade-off is risk, because on a share sale the buyer inherits the company's history including liabilities nobody surfaced, which is why buyers scope diligence differently on the two routes. Stamp taxes also differ between buying shares and buying premises. A specialist from our partner network models both structures against the buyer's preferred approach.
- What multiple should I expect on EBITDA?
- A range, not a single number. On indicative 2025/26 UK dental benchmarks, NHS-heavy single-handed practices in lower-demand regions sit around 0.6 to 0.9 times normalised EBITDA, mixed multi-surgery practices in normal-demand areas around 0.9 to 1.2, and private-focused practices in high-demand regions around 1.1 to 1.4, with corporate buyers sometimes paying a strategic premium above that for a practice that fits their map. Quote a single multiple and you mis-set expectations on one side or the other.
- Do you handle the legal side of the sale?
- No, that needs a dental specialist solicitor. The firms in our partner network work alongside them, providing the financial work (valuation, EBITDA normalisation, tax structuring, post-completion reconciliation) while the solicitor handles the contract, completion accounts and legal due diligence.
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Get the valuation right before you list
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