Our mergers & acquisitions update for the dental market summarises the drivers of deal activity and active acquirers in the sector, and highlights the key transactions across the UK market in recent times.
With 90% of NHS dental practices not accepting new patients and staffing challenges creating difficulties in delivering contracted UDAs, there is a continued push towards private care amongst dental professionals. With no visibility on a short-term solution to address the issues around NHS provision, the growth in private dental care looks set to continue in the coming years as consumers are driven away from NHS-funded services.
From an M&A perspective, the market continues to see significant deal activity driven by a number of private equity-backed corporates. In recent years this has been buoyed by cheap debt and the expectation of multiple arbitrage upon exit by acquirers. However, with increasing debt costs and operational challenges within some corporates, the market may see a slight slowing of deal volumes in 2023 and softening of pricing from recent highs. This will likely create a “flight to quality”, with premiums paid for high quality practices and a stronger focus on private provision rather than mixed offerings..
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Private vs NHS
There has been a significant rise in the number of NHS patients opting for private dentistry, principally driven by 90% of NHS practices currently not accepting new patients
Cosmetic and orthodontic services have seen strong growth in recent years, further boosting private provision across the country
Recruitment remains a key challenge across the sector, with 65% of practices reporting unfilled vacancies for dentists
Reduced international options due to Brexit and weak dental student intake, combined with the lack of growth in specialist registrations, is a concern for the long-term stability of the dental workforce
Market ownership structure
Despite years of consolidation, the market remains highly fragmented, with nearly two thirds of practices still independently owned
Corporate dentistry groups continue to increase their penetration through acquisition, with an ever growing list of private equity-backed operators seeking transactions
The rising cost of debt and staffing/operational issues for some mixed practice corporates may cause a slight slowdown in transaction activity in 2023, with a softening of valuations from their recent highs
Private vs NHS Provision
There has been a rise in ‘dental deserts’ – areas with extremely low NHS dentistry access rates due to staff shortages and practices being forced to close
Data shows the most affected borough has 57x more population per dental practice than in the borough with best patient access, while CCGs in Lincolnshire and Yorkshire are the most affected overall
A recently published report into NHS dentistry found a staggering 90% of NHS dental practices are not accepting new patients, and only 56% of dentists in England performed NHS dental activity in 2021/22
Private dentistry has benefited from stagnant NHS coverage, as patients are forced to seek private treatments or face long waits for NHS dental services
Furthermore, the NHS only provides what are deemed as ‘necessary’ treatments, meaning private treatments are required for those seeking cosmetic and other specialist services, which continue to be growing segments of the market
As a result, the private sector accounted for c.55% of total UK dentistry spend in 2020/21, increasing from c.51% in 2017/18
Supply of private dentistry is more concentrated in affluent areas, such as London and the South East, where there is higher demand
Staffing & Retention
The dental market is experiencing recruitment difficulties, with increased reliance on locums alongside a drop in the number of dentists coming from the EU
Regional disparities in dental supply mean recruitment difficulties are likely to be variable, with the North East and South West likely to have more challenges due to a low demand for private dentistry and high supply of NHS dentistry
This is compounded by the fact that the private sector continues to attract staff looking to transition towards more lucrative private work
In the latest PracticePlan confidence monitor survey, 77% of NHS dentists didn’t see themselves working in the NHS in 5 years, with 46% indicating they would move to the private sector
Long term workforce stability may be vulnerable as training intake is fixed at a low level, and c.6% of registered dentists and Dental Care Professionals (DCPs) are being removed from the register each year
Dental student intake levels are at the lowest level in three years, despite the expansion of courses
These statistics are concerning for future NHS coverage – with the average NHS dentist servicing c.2,000 patients, every time a dentist leaves the NHS and isn’t replaced it puts further stress on the already stretched system
Despite the UK dental market undergoing consolidation by corporate providers for a number of years, the market remains surprisingly fragmented, with almost two thirds of practices independently owned
At a single practice/small group level, private dentistry continues to be most sought after by buyers, however certain acquirers have favoured mixed practices due to the benefit of contracted NHS revenues
Private equity continues to play a central role in corporate dentistry expansion, with a number of PE-backed platforms growing significantly through acquisition in recent years, utilising cheap debt with the expectation of multiple arbitrage upon exit
However, some acquisitive mixed practice corporates who have focused on top line growth are now experiencing staffing challenges and are struggling to deliver contracted NHS UDAs
These staffing challenges, combined with increased debt costs, are likely to slow their M&A activity in the short to mid term, as mixed practice corporates look to resolve internal operational issues in order to boost their own valuations ahead of exit
As a result, we expect to see a slight slowing of M&A volumes during 2023, with a “flight to quality” and a strong preference for private practices from acquirers. Overall valuations of single practices and small groups is also expected to soften slightly after recent highs, with premiums for high quality private practices
Key PE-Backed Acquirers
No. of practices
Phoenix Equity Partners
Portman / Dentex
Real Good Dental
England, Scotland, RoI
North, Midlands, East
Selling Your Dental Practice or Group?
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