In conversation with the head of M&A from one of Britain's major dental corporates, it becomes apparent that they no longer have the time or the patience to buy UK practices with anything less than £250,000 p.a. EBITDA.
Generally speaking, that will mean any dental business below a million in sales.
Such sub-million practices are now regarded as "low-hanging fruit" and, given the costs of acquisition (legal, accountancy, due diligence and integration), there's an economy of scale that tells them to look for bigger fish both at home and overseas (sorry about the mixed metaphors there).
So while the big boys navel gaze, integrate, consolidate, emigrate or wait for the CMA (Competition and Markets Authority) to approve their mergers........
....that, of course, creates opportunity for the "micro-corporates" that are on the way from:
1 to 2 locations (yes - technically, you could be described as a micro-corporate, although I don't think you'll be getting an invitation to the Association of Dental Groups any time soon);
2 to 5;
5 to 10 ( at which point, a glass ceiling on bank funding forces you to consider external investment - a real moment of truth);
10 to 35;
35 to 100.
You get the picture.
Each of these stages of growth comes with it's own unique challenges.
Buying (or opening) your 2nd location is potentially more scary than your 10th, because you haven't yet figured out all the pitfalls and tips to make the transaction as painless as possible - you don't know what you don't know and you haven't figured out how you can be in two places at once.
Buying your 10th is a groundhog day - here we go again (as I mentioned in a recent post, winning the hearts and mind of the new team and then changing the systems and processes).
Given the exit of the big boys from the low hanging fruit orchard, one could argue that there has never been a better time to look at your 2nd location.
Yesterday I spent over 7 hours in conversation with two business partners who are exactly at that point.
They have a Champions League business that has been at the top if it's game for over a decade - a well-oiled and very profitable machine - and their meeting with me was all about location #2 - in advance of a proposed date some time in the summer, they wanted me to share with them every possible pitfall and how best to approach the project.
7 solid hours of "how do we get this right and what can go wrong?"
Perhaps more importantly, "are we better buying #2 or just opening a squat?"
Frankly, there are more micro-corporates now than ever (and that is keeping goodwill values robust) and a danger that it's late to be getting on the bandwagon - but I think that with careful due diligence (something sadly lacking in many acquisitions), there are still good reasons to consider expansion.
But get a mentor, coach, trusted advisor before you take the plunge - it's a dangerous journey if you are not well prepared.
I can help - firstname.lastname@example.org
p.s. If you are low-hanging fruit and want to sell - get a good independent valuer and agent to assist - find one through word of mouth recommendation.