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How does the dental practice sale process work?
After the sale of Richard and Jenny Graye’s dental practice, we caught up with them to find out about their experience with MediEstates, the events that led them to decide to sell, things to consider when you’re selling and what life is now like as an Associate.
How do you feel now you’ve sold your practice?
"Relieved is the biggest thing. Mainly because of the current economic climate. We’re really glad to no longer be responsible for the running of the practice’’
Covid has taken a lot out of people, not just in our industry. Having a practice that is 85% private and 15% NHS, at the beginning of Covid the initial worry with being so private was about how much support we would get; but the government came through. But there was a general feeling afterwards that the world had changed. We (dentists) had that bit of freedom with almost 10 weeks of enforced idleness - although I worked a little locally - so there was a feeling that there was a life outside of all of this.
Being so involved for 30 years and approaching 60, it all coalesced into seeing if there was a market out there for our three-surgery practice. I’ve known the MediEstates Valuation Manager for a long time, and it was a case of let’s just dip our toe in the water and see if it sells and someone comes along.
Over the past 10 years, you had frequent valuations from MediEstates before you finally decided to sell? Tell us why.
“We chose MediEstates because we trusted them and the person who looked after us”
The initial thought process of having valuations carried out by our MediEstates Practice Valuation Manager over the years was that it was part of our long-term financial planning, and what we’ve laughingly described as ‘freedom day’! They would visit us out of hours and over the years they put in a lot of free work and gave us sage advice on how to build the practice, what financial and equipment commitments we should make, which saved us a lot of money.
Having made the decision to sell, we had a couple of valuations, and we chose MediEstates because we trusted them and the person who looked after us. Their arguments as to why we should be valued at a certain price made sense and for us it was also working with a large, reputable company. After the valuation was done there was no need to do any face to face with any of the team at MediEstates. It was all done by email or phone call, which really helps to keep the process confidential and ensures your team don’t find out until you are ready to share the news.
How long did the whole process take and how many viewings did you get?
‘’We had six viewings before we accepted an offer, so we were done and dusted in about four weeks!’’
We had the first viewing after two weeks. After four weeks of going on the market and agreeing a price, the legal and due diligence began. The buyer (an associate of another practice) paid his deposit to MediEstates after six weeks which then formally committed him.
How did you find the whole process with MediEstates and how was the support you received?
‘’Excellent! I’ve said this before; I can’t fault MediEstates!’’
The Practice Transitions Team worked almost tirelessly and was very, very good at chasing things up and keeping us on board with what was happening - including from the buyer’s side. The Legal Team made things very straight forward too, informing us of when we needed to sign and send things back. We didn’t feel any stress through the sales process.
What challenges did you face during the process?
“The biggest challenges were always to do with timing.”
The CQC gives a certain timeframe for the new owner to become the registered person and, as we had heard this was taking longer than usual, we applied early with the anticipation that we were going to complete around December. However, our buyer’s lender insisted on a new lease being in place for the building and the solicitors dealing with this didn’t appreciate that there was a time constraint with the CQC; we were very, very close to losing that date. Eventually we got it across the line at the end of March, so we were about four months delayed. The downside of this, in addition to stress, was that it cost us a lot more in legal fees than initially anticipated.
What is it like working as an Associate at the practice now?
‘’We have maintained our side of the gross quite nicely, even with a day off a week.’’
Both my wife Jenny and I have reduced our days to four. The new Principal is an implant dentist and has invested hundreds of thousands in new kit including Cerec. He has trained us all in how to use it, which is brilliant and I’m quite enjoying that.
As a result, we have maintained our side of the gross quite nicely, even with a day off a week. When you agree Heads of Terms you commit to working at the practice and maintaining the income for the practice during the sale. We have a big Denplan and private list and we have maintained that growth and we haven’t dipped even by dropping two clinical days. There was a slight fee increase and we’re working more efficiently.
Talk to us about the stresses of being a Principal Dentist and what made you decide to sell?
‘’It’s the degree of change that we’ve seen and all the extra things we need to do that’s not dentistry’’
Due to the degree of change we have seen during our career, it was just getting too much. The additional things we now need to do, such as CQC and compliance, was taking away any pleasure from the dentistry side of it all. While we had been lucky to retain our staff, we have seen friends and colleagues around Huddersfield struggling to fully staff their practices, which starts to cause concern. It all becomes a sort of drip, drip effect… all the things outside the clinical side of dentistry that we’ve endured and seen is very stressful.
What were your choices when selling the practice?
“It was important for us to have the option to leave or retire when we want to, rather than be tied in”
The new Principal wanted us to stay on and work in the practice. This isn’t always the case, although very often small corporates will tie you in for a period of time. It was important for us to have the option to leave or retire when we want to, rather than be tied in. We have agreed on a three-month revolving contract, so either of us could give word of termination of contract. If the new Principal had wanted us to leave, then we would have carried out locum work or similar.
What advice would you give to other dentists?
“Young dentists need to seek better financial advice; I can’t stress this enough.”
Engage with financial planning services early on, including getting your practice valued. Long-term financial planning gives you a sort of freedom. We didn’t engage a financial advisor early or young enough, but we are lucky it has all worked out because he’s done a really good job for us.
Why not contact our team today and see how we can help with a free, no-obligation valuation?