Despite global uncertainty and the rising costs of running a business amid the UK’s soaring inflation, dealmaking in the UK dental sector has proven extremely resilient over the past 18 months. Record levels of activity were recorded during 2021, a trend that is continuing unabated in 2022, with strong revenue growth and a range of different buyer types helping to drive a wave of consolidation and dealmaking.
Revenues are being driven up amid growing awareness of oral health, a build-up of demand post-COVID-19 and the increasing popularity of cosmetic and aesthetic procedures. These booming profits are attracting various buyers and investors to the sector, with demand for dental practices spurred on by the huge degree of fragmentation that persists in the UK market.
According to figures from Christie & Co, rising demand saw the value of sale prices in the UK dental sector rise by 8.6 per cent last year, showing that there is growing incentive for owners to sell up. Growth in demand for acquisitions was even stronger, with Christie & Co reporting that 2021 saw a 24 per cent increase in registered buyers saying they were seriously interested in acquiring a dental practice.
What are the key growth drivers in the UK dental industry?
Dentistry is a flourishing sector in the UK for numerous reasons, with one of the key factors (as in many other sectors) being pent up demand for services that has been seen since the COVID-19 pandemic. With many not having seen a dentist since prior to COVID-19, there is huge ongoing demand for the full range of dental treatments, from check-ups to remedial procedures to cosmetic and aesthetic treatments.
Along with inflated post-COVID demand, there has also been more organic growth in demand for dental services, with increasing awareness among the general populace of the importance of good oral health and regular dentist check-ups.
Another factor driving demand for cosmetic and aesthetic dental procedures, is the proliferation of content-driven social media sites such as TikTok on Instagram and reality TV shows such as Love Island, which industry observers say have contributed to growing demand for procedures such as veneers and whitening.
Revenues in the private dental sector are also seeing significant growth as a result of problems that many patients are experiencing accessing NHS care. With a lack of staffing impacting NHS waiting lists, some patients are seeking private treatment (providing they can afford it), with many of these patients subsequently remaining on private client lists.
Private practices are also experiencing revenue growth as a result of the increase in flexible pricing. This enables patients to pay lower up-front costs, but ultimately means that practices can charge a higher price for treatment. Average treatments costs are also growing, due to rising demand for bigger and more expensive treatments. A factor that, again, could be attributable to pent-up post-COVID demand.
Make-up of the UK dental sector
A key factor encouraging dealmaking within the UK dental industry is its composition according to owner type. As with industries such as the veterinary sector and wealth management that we’ve examined in recent insights (both also sectors seeing strong dealmaking), the UK dental sector is highly fragmented, with the bulk of practices still independently owned.
According to Christie & Co figures, of the 12,583 dental practices in the UK, 8,059 are owned by independent operators, compared to 2,384 owned by smaller firms (with less than 22 sites) and just 2,139 owned by bigger firms such as corporates and mid-sized groups (22 sites or more).
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