The real value of goodwill


We often get asked for advice by people who want to know about the best way to sell their dental practice, or whether they should buy one. As the goodwill is usually the most valuable asset they are buying or selling it is this that we get asked about most often.

For sellers, maximising their goodwill value before sale is good business practice. For buyers, the main concern is whether the goodwill will stick to the practice once they are the proud new owners (usually with significant new debt).

Seems simple, but remember that goodwill stickiness varies depending on where you find it. Have a look at these three examples…

  1. NHS goodwill

At first glance, this would seem to be the most reliable goodwill to buy. It’s backed up by an NHS contract and the money comes in each month regular as clockwork, the buyer just has to make sure the UDAs get done. In most purchases this works out just fine, however, sometimes a buyer finds that the practice struggles to get the UDAs done because of slow, ineffectual associates, appalling lack of business process or a local over-supply of NHS dentistry. Add to that the fact that there is a new NHS contract just around the corner which some speculate will stop dentists mixing NHS and private treatments, and potentially lower the UDA value or tendering, and suddenly the goodwill doesn’t look quite such a dead cert. And of course, as a dentist, you have to be willing to work within the many and restrictive rules the NHS demands of their dentists.

  1. NHS/mixed/capitation practice

Goodwill values in these practices remain high and many buyers see this as the most desirable sort of practice to buy because of the increased clinical opportunity and freedom within them. These practices attract patients who will buy upgrades to their NHS treatment or a capitation/membership plan because of the quality of the relationships they have with their dentist. The goodwill is with the practice but also with the individual dentists. If the principal has been in place a long time and has a big list of loyal patients then the goodwill is also attached to him/her and buyers must ensure a lengthy and effective handover of patients with the seller’s full participation.

  1. Private bespoke practice

The goodwill in these practices is the hardest to transfer from seller to buyer and frankly the best chance of success is when the incoming dentist is able to appeal to the incumbent patients’ criteria for their dentist. By definition this works best when the buyer has some characteristics in common with the seller, for example, an ability to create and maintain rapport and trust, lives in and knows the local area, kids go to the same schools as the patients’ kids, has shared interests and shared values with patients etc… It is crucial the seller takes part in the transfer of goodwill and, preferably, introduces the buyer as his/her preferred successor. Even then, some patients will choose to leave and take the opportunity to shop for a new practice.

As you can see, the bottom line with buying goodwill is there is only real value in it if the existing patients keep coming through the door. Many, many buyers have found the £600k turnover practice they thought they were buying, a year down the track, is actually a £400k practice. Please don’t let this happen to you!

If you would like some help building your goodwill and ensuring your patients keep coming back, contact me on 07770 430576 or at


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