Welcome to this week's Market Update where we are delighted to share our latest Market Data relating to our twenty most recent practice sales. The key insights are:
- Metro practices are selling for an average of 110 cents in the dollar. Significantly, fourteen of the seventeen metro practices sold for more than 100 cents in the dollar confirming our view that "110 cents" is the new "dollar in the dollar". Very good practices, particularly where there is strong competition, are going for up to 130 cents in the dollar, with larger practices selling on a multiple of earnings.
- 76 interested buyers, on average, enquire about metro practices listed for sale through DMY. This is consistent with six months ago and remains c.50% higher than pre-COVID. This high volume of practices also brings a high diversity of buyers for a seller to shortlist from. As one client said to us recently: "I have been pleasantly surprised and pleased at the number and quality of people we have chosen to meet. They are all different which gives us some really good options."
- For regional practices, results are similarly healthy. Sale prices average 109 cents in the dollar and there are 32 interested buyers for every listing.
- 17% of the sale price is held in retention, with a significant range between 10% and 30%. 15% remains the most common amount, and retentions are rarely longer than 12 months.
You can access all of the supporting detail on our website here: DMY Market Data April 2023
Implications for sellers - if you have a good quality practice and are thinking of selling, you should feel confident of achieving a successful sale with a strong commercial outcome and a good new home for your clients and team. Don't take it for granted though and be attuned to what's most important to your preferred buyer.
Implications for buyers…a good understanding of the market, patience, empathy and flexibility are all important. Cultural fit will get you a seat at the table but you will need to be commercially sharp and attuned to what's most important to the seller if you want to secure that prized acquisition.
To discuss these findings in more detail, and what they mean specifically for your situation, contact DMY’s Directors below.
As a reminder, we listed three new practices last week:
All are receiving good levels of interest but it is still early days so register your interest if any of them look like a good fit as the Vendors will be started to meet interested parties shortly.
Finally, May has kicked off with some early client success with a 1 Principal firm, Mornington Peninsula $1,000,000 in fees (ID#98) executing a Heads of Agreement with a preferred purchaser and now moving through due diligence. DMY generated interest from 39 buyers for this opportunity, and it was first listed less than three months ago.
In our next Market Update we will be sharing more new data as we deep-dive into who is selling. Stay tuned for some interesting insights around seller ages, reasons for selling, fees being sold and gender.
See you out there!
Mark and Daniel
mark@dmyassoc.com.au daniel@dmyassoc.com.au
