Christie & Co Business Outlook 2021 reveals strong dental operator optimism and predictions for the year ahead
Specialist business property adviser, Christie & Co, has today launched its annual Business Outlook report, ‘Business Outlook 2021: Review. Realign. Recover,’ which reflects on the themes, activity and challenges of 2020 and forecasts what 2021 might bring across the industries in which Christie & Co operates, including the dental sector.
The report details the impact of Covid-19 on the sector, how the sector has had to adapt in order to pursue business operations through these challenging times, the progress of recovery in the sector, and the funding landscape.
In this year’s Business Outlook, Christie & Co also surveyed a pool of dental operators to hear their views on sentiment in the market, and how they feel about business operations in 2021. The company found that the dental market is generally feeling optimistic about recovery in the year ahead, with two-thirds of respondents stating that they are feeling “positive” or “fairly positive” as the market continues to return to normal trading conditions. The majority feel it will take up to three years for the market to return to pre-Covid levels, however 37.5% are more optimistic that this will be within the year.
Christie & Co’s neutral price index movement for 2020 follows a challenging year for most dental practices and consistent increases over the past four to five years. Sentiment for 2021 is balanced between those who feel that prices will increase, remain neutral or fall.
Despite the absence of a clear consensus on price movements for 2021, one can look forward to an active market within which 37.5% of respondents said they are planning on selling their practice or some assets, and 22.6% said they are planning on acquiring a new business / practice some assets.
The report also shares market predictions for the year ahead:
- A significant volume of practice sales will complete in Q1 in anticipation of the Spring Budget and a likely increase in Capital Gains Tax (CGT).
- Pre-Covid levels placed a heightened emphasis on oral health. We expect this reinvigorated appetite to continue as independent buyers purchase their own practices.
- Corporate buyers with ambitious buy and build targets will make up for lost time, and deal flow will increase considerably.
- Corporate buyers will continue to bid aggressively for larger practices, and we will see renewed price inflation for better quality sites.
- A greater supply of practices will come to the market from owners who put their exit plans on hold in 2020.
- Much of the market will continue to bounce back strongly. However, price corrections will affect poorer quality businesses proportionately harder as they struggle to adapt financially.
- Practices for sale that remain in a ‘recovery stage’ will progress with more flexible deal structures to bridge the value gap with increased deferred consideration and longer vendor tie ins.
Paul Graham, head of dental at Christie & Co, comments, “Despite the unprecedented challenges of 2020, the dental sector adjusted quickly to the shock of the pandemic and, whilst practices were closed during April and May, the profession bounced back very strongly. The market remained remarkably resilient, with the majority of transactions put on hold rather than abandoned, and we’re optimistic that recovery will continue, and deals will successfully complete in greater volumes in 2021.”
To read the full report, ‘Business Outlook 2021: Review. Realign. Recover’, please visit:
https://www.christie.com/news-resources/business-outlook/2021/dental-practices-business-outlook-2021/
