Notable UK deals and looking ahead
- G Square Healthcare Private Equity acquired a majority stake in Dental Care Group in April 2019. At the time of acquisition DCG comprised 21 practices in the East, and South East of England, and in the year ending March 2018, it generated a gross profit of £7.7m (€9m) from revenues of £15.7m (€18.5m).
- Apposite Capital invested in Riverdale Healthcare, a mixed NHS and private dental investment group in January 2019. As part of the transaction, Riverdale acquired Alpha Vitality Group, an 11 practice dental group operating in the North East of England, and also recently acquired Archway Dental Practice and Hebburn and Pelaw dental practices, both of which strengthened the Group’s position in the North East. The Group now owns 17 practices in total.
- In September 2017 CBPE Capital LLP acquired a majority stake in Roderick’s Dental Limited, the UK-based provider of NHS, private and specialist dental services. In the year to 31 March 2017 Roderick’s generated revenue of £51m (€60m) and EBITDA of £5.8m (€6.8m).
The fragmented UK dental market will generate significant opportunities for investors with increasingly positive market drivers. These include favourable demographics as the UK population increases in size and ages and the rapid growth of lucrative private dentistry which remains underpinned by evergreen NHS contracts.
A high volume of recent transactions have demanded low to medium double-digit multiples being paid for dental groups, with some larger scale groups even commanding high double digit multiples. The impressive EBITDA multiples paid for some of these dental assets is due to a combination of:
• Pro-forma buy and build pipeline
• Mixture of NHS and non-NHS off ering
• Location of practices that give access to high footfall of patients
The dental market will continue to be an attractive market for private equity investors, given the opportunity to grow rapidly through roll-out and consolidation and the attractive valuation multiples achievable for dental groups of signifi cant size and scale. Pan-European consolidators will also play an increasingly important role in the UK market, attracted by favourable exchange rates and the additional synergies a large multinational operator can achieve.