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MediEstates - Looking to sell your practice to an associate?
Looking to sell your practice to an associate?

Looking to sell your practice to an associate?

 

Having an associate ready and willing to buy your practice may sound ideal, but the process is rarely as straightforward as it seems. Alison Bates, practice valuation manager at Mediestates, explains why a third-party helping hand is essential to see the transaction through



Looking to sell your practice to an associate?
Selling to one or more trusted associates is often seen as a less complicated and stressful transaction than putting a practice up for general sale. The buyer is someone already working in the practice, who knows the staff, patients and the day-to-day operations inside out.

For a principal dentist who has identified a buyer for their practice without having to go to the open market, it probably seems that a lot of the hard work has already been done. They may feel there’s no need to instruct an agent, as a buyer is already in place and the transaction can move ahead with the minimum of bother. However, even for those with a buyer already in place, there is still a need for a tailored brokerage service to help them navigate any number of hurdles they will find along the way to make the transaction go as smoothly as possible.

A tailored brokerage service
The first step is always a practice valuation. Even if a principal is selling to an associate, it’s important to understand the true value of the practice under current market conditions. A good broker will always value a practice as if it was going onto the open market to get a fair price for the vendor, without the risk of them accepting a lower valuation just because they are selling to someone they know.

A broker should look to handle all the negotiations with the buyer. As a business owner, it can be difficult to negotiate a deal with a colleague, as personal feelings can become involved, relationships can become fraught and it’s difficult to be objective. A third-party broker can remain objective and ensure negotiations are conducted in a fair way for all parties. At the same time, it reiterates to the buyer that this is a serious transaction and they are going to have to pay a fair market price.

Having a ‘plan b’
Unfortunately, in our experience, we know that selling to an associate is more likely to fall through than selling on the open market. What may have seemed a wonderful idea in the first instance can turn out to be unfeasible for any number of reasons a few months down the line.

Often, if a deal does fall through, the principal is forced to go back to square one and start the process of finding a buyer all over again. It’s on occasions like this where having access to a third-party’s extensive database of prospective buyers can be invaluable. With the valuation complete and the sale process underway, it’s only natural to want to continue to push forward and be able to immediately invite offers from other interested parties.

Financial commitment
Once a principal accepts an offer on a practice, the broker will ask the buyer to sign a deposit schedule and ask for a deposit to secure the sale. This acts as a financial commitment to show the buyer is serious about proceeding with the transaction. It also acts as a financial protection measure to the vendor to cover any abortive fees should the sale not go through for any reason.

Guiding you through the sale process
Once an offer has been agreed and finance is in place, there is still a way to go. On average, the sale of a dental practice can take up to nine months to complete, so brokers need to keep in regular contact with both parties’ solicitors to ensure they are working towards the same goal. This helps to alleviate any issues that may crop up, such as requests for funding, indemnities, warranties and redemptions and ensuring the necessary paperwork and information in relation to the business is in place ready for inspection by the buyer’s solicitor.

Satisfying the Care Quality Commission (CQC) is potentially the most complicated, but essential, part of a practice sale. There are a number of important stages to complete and timings are crucial. Failure to follow CQC procedures or mistakes in the application process can seriously delay the sale process. The team at Mediestates has extensive experience in this sector and its expertise means it is ideally positioned to provide support specifically tailored to individual requirements.

Here to help
Our experience has shown us that when selling a practice to an associate, having professional help from an experienced broker from the outset can ensure a stress-free and smooth transaction. If you are ready to sell your practice with a buyer in place, contact Mediestates, a specialist broker of dental practices, today to get everything moving in the right direction.

Posted by: Alison Bates on

General Buyer Terms 

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 1998. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
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