You would be forgiven for thinking that selling your practice to an associate – a colleague you know and trust – would make the sale of your practice easier and quicker. This isn’t always the case, but with the right advice and support it could work well for all involved.
Four tips for selling to an associate
1. YOU STILL NEED TO FIX A FAIR PRICE. Where personal relationships are involved, it is very difficult to agree a fair price without the help of a neutral third party.
Instructed by the vendor, a broker can conduct the negotiations buyer, which ensures objectivity and that a fair price will be reached.
2. BUSINESS IS BUSINESS. Despite the personal connection between you and your buyer, this is probably the biggest financial transaction you will ever make, so it must not be clouded by any sense of personal obligation.
Instructing a broker immediately puts the sale on a business footing by ensuring a financial commitment is made by the buyer in the payment of a deposit. This secures the sale and starts the ‘sold subject to contract’ (SSTC) process.
3. FINDING A BUYER IS ONLY THE BEGINNING. The SSTC process is lengthy, and that’s the case whoever your buyer is. Even though your associate will be familiar with the practice, staff and patients, taking over ownership is entirely different. Their solicitor and finance lender will require answers to a long list of questions regarding the practice building and business. Both sides also have to apply to the Care Quality Commission (CQC) at various times and potentially go into temporary partnership if there is an NHS contract.
4. IT STARTED SO WELL. Selling to an associate, colleague or friend has a higher failure rate than selling on the open market, so what seemed like a good idea at the start may well not turn out as planned. What happens if your associate pulls out? You could end up back at square one.
Selling to an associate can work really well; however, it is vital to ensure you have an experienced dental practice broker, such as Mediestates, to see you safely through the sale process.
We can guide you through every step, including tackling the CQC application. If your associate does get cold feet, we have over 4,000 registered buyers on our books who could step into their shoes.