The process of buying or selling a dental practice is a famously complicated one.
Care Quality Commission (CQC) compliance, financial stress-testing, the NHS contract transfer process, tax planning, due diligence, profit and loss surveys, business plans, and finance applications are a few of the many processes that may be involved depending on if you are a buyer or a vendor, and your circumstances.
The process involves many different parties and typically takes about six to nine months to complete. The dental practice market is also unique, with its own set of rules and regulatory bodies, which both buyers and vendors must satisfy.
Given its complicated and specialist nature, buyers and vendors should ensure they use specialist dental financial and legal professionals for every aspect, including specialist dental accountants, solicitors and wealth managers.
Specialist accountants
Practice owners and prospective buyers should make sure they use a specialist dental accountant who is registered with the National Association of Specialist Dental Accountants and Lawyers (NASDAL). Even before a buyer has identified a practice to buy, the accountant can get an idea of the buyer’s financial circumstances and use sector knowledge to advise them on what sort of practice will be viable for them.
Once the buyer has identified a practice, the accountant can help with producing budgets and forecasts, and perform a stress test – which projects a worst-case scenario and tests as to whether the financial plan is tenable.
At every stage of the ‘sale subject to contract’ process, from offer acceptance through to completion, they can check the financial due diligence aspects alongside the solicitor and review the all-important sales and purchase agreement (SPA), which contains all the financial details of the transaction.
Finally, the accountant will advise on any relevant tax matters, including their tax position post-sale. This is particularly important should they need to make decisions about selling shares or tax planning as part of the purchase.
Specialist solicitors
Specialist dental solicitors are experienced in all the vagaries of the dental practice market and know what is required by third party bodies, such as the CQC and the NHS local area team, if the practice has an NHS contract. They are also key in helping clients negotiate the SPA, as they have a sound understanding of what will be acceptable and the limits they can stretch to.
Timing, and keeping the process moving, is crucial in a practice sale as, for instance, if the buyer misses the deadline stated on the CQC application for sale completion they have to start the entire process again, adding another three months. Dental solicitors are also familiar with dental language and know the right questions to ask when performing due diligence on behalf of the buyer.
Wealth managers
A specialist wealth manager can advise on whether it’s a good time to sell from a financial point of view, and what level of valuation they should look to achieve.
A wealth manager analyses the entire financial circumstances of the vendor, including the practice property, any loans and pensions. They will then proceed to advise them on the best ‘lifetime plan’, which includes an analysis of what their post-sale plans should be in order to achieve their ideal lifestyle.
As part of this they look into specialist areas such as when would be the best time to take their NHS pension. Wealth managers have an understanding, not only of the dental market, but also the entire financial market – and will advise on tax implications of the sale. In essence, they work out how to the make the vendor’s money work as hard as possible.
The accountant can get an idea of the buyer’s financial circumstances and use sector knowledge to advise them on what sort of practice will be viable for them
Dental practice brokers
A specialist dental practice broker is the experienced facilitator keeping all the parties moving towards the same goal. Although they instructed by the vendor, they also offer advice and assistance to the buyer to keep the process moving. They can also put the buyer in contact with dental financial advisers to help them access the best healthcare lenders and identify those most likely to offer good lending terms to dental practice buyers.
We recommend our customers use specialists because dental practice brokers, accountants, solicitors and wealth managers deal with dental practice sales every day, and the combined expertise can ensure the sale goes through to everyone’s benefit.
