Irrespective of whether you are buying or selling a dental practice, you need to prepare in advance and make sure that you are fully geared up for the transaction.
In this Newsletter, we will look at selling your practice. Here are some tips to help you get started:
1. Appoint your advisors early and select carefully
Your advisors should be experts in the dental field who are familiar with dental transactions. There are complex issues in a dental transaction, not least the transfer of your NHS Contract and CQC registration, and non-specialist solicitors or accountants may cost less in the beginning but could end up costing more later down the line when issues crop up that are not properly resolved.
2. Valuation
Even if you have a private sale, make sure you obtain an independent valuation so you know how much your practice is worth. Choosing a specialist dental agent to value your practice will ensure that you have a fair idea of how much to sell for.
3. Due Diligence
A properly advised Buyer will undertake a thorough and extensive due diligence exercise. As soon as you accept an offer, it is a good idea to start collating some standard information in a ring binder which a prudent Buyer will request. This can include employment contracts, associate agreements, hire purchase agreements, leases, x-ray certificates, a copy of your NHS Contract, Pay & Activity Statements, EPC, asbestos report, waste contracts, practice insurance etc. A specialist dental solicitor can assist you in collating the key information, and advise you on the best way to present this to the Buyer and what liabilities or further considerations may arise from the information you are providing.
It is always advisable to ensure that you collate due diligence documentation and respond to the Buyer’s due diligence enquires as thoroughly and quickly as you can in order to ensure as smooth a sale as possible. The Buyer wants to be assured that they are going into the purchase with their eyes open and this means, that they will want to see everything to do with the practice. Having all this information collated from the outset will speed up the sale process considerably.
4. CQC Registration
You will already be registered with the CQC and the Buyer will want to see evidence of your registration. Recent NHS England policy has suggested that your NHS Area Team will request sight of a partnership CQC registration before agreeing to a variation of the NHS Contract. It will therefore be necessary for you to apply to the CQC with the Buyer under a joint partnership application.
5. NHS Contract
Make sure your “house is in order” by ensuring that any previous underperformances of UDAs or UOAs have been dealt with and if NHS England is conducting a clawback, supply documentary evidence that the liability is being discharged in full by you, whether by monthly deductions from your BSA statement or in a lump sum.
6. Property
The sale of the practice will include either the sale of a freehold, grant of a new lease or assignment of a current lease. A Buyer will most likely require funding from a lender to acquire the practice and most lenders will only lend on the basis of a lease of more than 10 years. Any freehold sale will require a commercial valuation of the property.
Where third party landlords are involved, you may need to factor in additional time and costs into the transaction.
Check that you have approved use of the premises as a dental surgery (from the title deeds and the planning authority). If you have a mortgage, make sure there are no restrictions/penalties on redemption or granting a lease.
7. Plan in advance
A standard dental practice sale could take between 3 to 6 months (potentially longer if negotiations are protracted and then having to factor in transfer of the NHS Contract and CQC registration). Therefore, start your sale/retirement planning early. It is always better to have a conservative timetable so that both parties’ expectations are managed.
8. Your Future Plans
If you wish to stay on at the practice after completion as an Associate, make sure that this is a term of your offer, and that the Buyer is happy to retain you after completion. Ensure that you put in place an Associate Agreement.
Click here to read our newsbrief in full.
A quick ‘Heads up’; Getting to grips with CQC registration; IT is no longer a luxury; Performers List Appeals; The Importance of Written Associate Agreements.