NO 1 Surround yourself with specialist advisers
The legislation that dental practices operate within is very complex and particular. It is hugely beneficial to appoint specialists who understand this framework.
A specialist dental accountant will be able to provide an initial estimated goodwill value to enable a financial advisor to assist in planning the timing of your sale. The benefit of having a specialist dental accountant will also be reaped during the sale process, as they can use their expertise in reviewing the sale purchase agreement, both from an accounts and a tax perspective.
You will also need to appoint a specialist lawyer to assist with the sale.
NO 2 Be prepared for questions
Once a buyer has been found and you have accepted their offer, the buyer will undertake a process of obtaining detailed clinical, financial and administrative information about the practice (known as due diligence).
Having this information organised and available can be enormously helpful in speeding up the sale process.
NO 3 What is being sold?
Depending on your business structure you may have to make a decision on what you are selling…..
If your practice has been incorporated into a limited company, you will need to decide on whether you are selling the shares, or whether the company is selling the assets (for example, the goodwill and equipment).
There will be different tax consequences depending on what is sold, so it’s vital that tax advice is sought prior to the practice going on the market.
NO 4 Allow plenty of time!
Practice sale transactions can take a lot longer than expected to complete.
There can be many reasons for this including the red tape in respect of CQC, and if there’s an NHS contract, the LTA.
Depending on what is being sold (see below) the buyer may need to undertake additional due diligence particularly if you are selling shares in a limited company.
NO 5 Get all your ducks in a row!
Before considering putting the practice on the market, do an internal audit to ensure everything is in order. Has all electrical testing been carried out? Is servicing on equipment up to date? Are you in possession of all necessary licences and registrations?
A common issue is associates not having written contracts in place!
NO 6 What about the practice property?
Many deals have been delayed due to issues with transferring the interests in a property from the seller to the buyer. In some cases, it has even stopped the deal completing!
This is particularly true if the property is leased.
Care has to be taken to ensure there are sufficient provisions for the lease to be transferred to the buyer in a timely manner. This is particularly pertinent if the property is owned by the seller’s SIPP.
NO 7 Don’t take your foot off the gas
A regular issue encountered can be principals slowing down once (or before) their practice goes on the market. This causes two problems – lower income/profits will reduce the value of the practice and a trend of declining earnings may cause a potential buyer to question if the practice is a suitable purchase.
It is therefore imperative that performance remains consistent with previous years.
Conversely, a push to increase performance before you think about putting the practice on the market will help increase the asking price. It’s the best way to promote the practice’s true potential.
For help and advice on selling your practice contact Heidi Marshall.
