Selling your dental practice - everything you need to know

Planning is vital. Ideally you should be considering your options three years in advance. Therefore think ahead about the next steps for the future of your practice in advance.

A Valuation is important. Do not accept any offers until you know your practice’s worth from an independent valuation. Many principals are amazed at the attraction their practice has to the open market. A principal once was about to sell for £815,000 when his practice was worth in excess of £1,500,000, meaning he would have lost nearly £700,000!

Time is essential. Allocating time to sell needs discipline. It takes a lot of time and skill to manage a deal through to completion. It may require several months of your dedicated attention. Because of this, it is well worth looking into the support you could get from an agent. It could save you a significant amount of time and stress.

Understand the market in your area. There are currently over 4,500 dentists looking to buy a practice in England or Wales with Frank Taylor & Associates. And when you consider that 14 banks are lending to dentists, we know they are genuinely interested and have sufficient access to funds.

Think about your premises. Are they freehold or leasehold? If leasehold, check there are at least 10 years left to run. If this is not the case, then look into seeing if a shorter lease will impact on the goodwill value.  Or if you want to sell the freehold, arrange a commercial valuation.

Consider your future. What are you planning to do once the practice is sold? Are you planning to stay on at the practice? What hours would you like to work? What associate fee would you charge?

Have you thought about due diligence? This is very important to make a start on as soon as possible. It is the assembling of all the essential paperwork required to sell your practice.  Usually this takes as long as 3-8 weeks to complete. So the sooner you start the better!

Engage a specialist dental solicitor – it will make a huge difference to your transaction speed.

Look around and find the right agent. Check they have access to a good supply of dentists looking to buy. Make sure they take the practice to the full open market. Look into if they work for both the buyer and the seller as this creates a conflict of interest. Chat to a number of agents and decide which is best suited to you.

Maintain positivity. Potential buyers will be looking at the practice performance through the process of the sale and could ask for a reduction in the sale price if your figures drop. Therefore it is vital to stay positive and keep the practice running to the best it can be so that you receive the best price.

For more help and advice on selling your dental practice, give us a call on 0330 088 11 56 or visit www.ft-associates.com 

Are you prepared?

If you have a leasehold practice that you’re thinking about selling in the near future, then it’s really important that the terms and conditions of the lease are fit for a sale when the time comes. 

More and more practices are now coming to the market as leasehold and whilst banks are happy to lend against a lease, they do insist the lease has at least seven (ideally ten) years remaining as they will secure the loan around the years left on the lease.  So, if your lease has less than ten years to run, we suggest that now might be a good time to get the term extended without telling the landlord your long-term plans.

Alternatively, if you own the freehold and are your own landlord that will certainly make life much simpler.  And if you are considering retaining the freehold (possibly to put it into your SIPP) and will be creating a lease you should be clear what your terms will be.  Make sure you discuss the property with a chartered surveyor.

We tend to see issues arise mainly from a third party landlord who is either disinterested and not engaging in the process, or sees it an opportunity to benefit financially from the sale by holding the principal to ransom.   Issues with a lease and landlord can delay a practice sale considerably as we’ve seen recently with a leasehold sale we were involved in.  Once the sale was underway, it was disclosed that the lease contained a clause stating that on any application for consent to assign, the tenant must first offer to surrender the lease to the landlord and as soon as the landlord realised it was a sale, he insisted on this.  The principal’s lawyer thought the provision was un-enforceable and sought Counsel’s opinion to confirm this (yes, not cheap!) and sadly it wasn’t quite as black and white as they had hoped.  Counsel said that the landlord could insist that the principal had to offer to surrender the lease to the landlord first, but that if he accepted, the landlord then couldn’t force the principal to actually surrender it, he could however block the assignment. This left a bit of a stalemate and eventually the landlord did agree to surrender and re-grant the lease, but for a shorter term and with additional changes.  Whilst all of this was happening the principal continued with his usual workload and was kept busy ensuring that his practice remained on track.  Added to the fact that the sale was delayed by many weeks!

For more advice on selling your dental practice call 0330 088 11 56 or visit our website www.ft-associates.com

CQC Inspections

In April 2015 CQC (Care Quality Commission) introduced new fundamental standards and key lines of enquiries for monitoring the dental sector as a result of a review that saw the CQC recognise that dentistry could be classed as low risk compared to other areas it covers. 

As a result of this change in regulation, this now means that all dental practices have to provide evidence they are fully compliant at all times across five key lines of enquiries.  These are:

Is this practice....

• Safe
• Effective
• Caring
• Responsive
• Well-led

Practices are expected to be able to evidence that their policies and procedures are fully incorporated into the practice, are “living” documents and that all of the staff are fully aware and conversant on what the policies and procedures entail.

Going forward, the CQC inspections undertaken at a practice are to be very different.  For example, six weeks before an inspection takes place (and four weeks before the practice is even aware that an inspection is to take place) CQC will start gathering information from a number of different sources such as:

GDC
NHS England
NHS Choices
Consumer websites – such as Yell.com

In terms of the actual inspections....they will take all day and the inspector undertaking the review may be accompanied by a dentist who will interview all staff members (both clinical and administrative) and any patients who are prepared to be interviewed.  

Given these important changes, it’s vital that dental practice owners understand the new regulations and are prepared.  At Frank Taylor & Associates, we’re providing a series of one day seminars (CPD points available) where we cover all the key issues on running a successful practice in today’s marketplace.  For more details on these seminars, please call 0330 088 11 56 or visit ft-associates.com