Specialist business property adviser, Christie & Co, has today released its mid-year review of the dental market so far in 2021, which analyses market activity and reveals a positive bounce back to pre-COVID market levels.

The report shows that the first quarter in 2021 saw a glut of deals carried forward from 2020. Increased buyer confidence and the threat of a rise in Capital Gains Tax (CGT) in the Chancellor's Spring Budget contributed to a record volume and value of deals completing in a short period of time.

Moving through 2021, it said deal volumes are returning to pre-COVID levels, but the likelihood of CGT rises in the Autumn Budget could place another artificial deadline for completions leading to a spike in September and October.

Christie & Co said pricing and deal terms had returned to pre-COVID levels, and multiple offers are coming in on higher-quality practices. But, with demand continuing to outstrip supply in most segments the lack of new opportunities coming onto the open market is leading to premium prices being achieved for many practice types.

This also means that competition for practices remains fierce, with multiple offers on practices being commonplace. Christie & Co said it had agreed offers with an aggregate value of £200 million during Q4 2020 and Q1 2021 and received an average of three offers per practice.

It added that there is limited evidence of distress in the dental sector despite the pandemic, however, smaller practices have inevitably found it more difficult to adapt to the new operating procedures. There is evidence of price inflation for larger practices, and it is likely that corporate buyers will continue to bid aggressively for such businesses.

Christie & Co said it had seen an increased number of buyers coming into the market; both established dental companies who had put their expansion plans on hold in 2020, and new market entrants who have been encouraged by the positive way that dentistry adapted to the post-lockdown trading environment.

The report concluded with a look ahead to the remainder of 2021. It predicts that NHS reforms in England are on the horizon. The contract reform programme in Wales might point the way to a capitation-based system, as Scotland has been for years, however, whether these are workable in England given the access issues experienced through the pilots and prototypes, is another question. Additionally, Average Earning Payments from NHS Scotland are due to end in July which, due to fewer rules and restrictions, will make transacting easier.

Paul Graham, head of Dental at Christie & Co, said: "The market has rebounded incredibly well and, whilst the profession is still experiencing some operational challenges, this hasn't hindered the appetite coming from investors looking to acquire. Practice owners looking to sell their business can be confident of pre-COVID demand."