=
MediEstates - Top Tips for Buying and Selling a Dental Practice
Top Tips for Buying and Selling a Dental Practice
Whether you have worked hard to build a thriving dental practice and are on the brink of selling it or you are about to take the plunge and buy your own dental practice, be sure to follow leading dental acquisition solicitor Leah Groves’ five essential tips to make the process a success.

1. Instruct a dental specialist solicitor

It is vital that both the seller and buyer instruct experienced dental specialist solicitors well versed in the nuances of dental practice sales and purchases. This ensures that the deal runs smoothly and all parties’ interests are sufficiently protected, therefore minimising unnecessary delays and costly mistakes.

It is advisable for the seller to get a specialist solicitor on board as early as possible, ideally before the transaction begins, to collate and review the practice paperwork. This will help flush out any potential issues in the sale process at an early stage.

2. Valuation from a dental practice valuer

Whether you are the seller or buyer, it pays to take the time to get a formal valuation for an accurate sale price and as evidence of a third party valuation if ever required by HMRC. Ensure that the valuation is compiled by a suitably experienced dental broker who knows the dental acquisition market inside out, even if the sale is to an associate. This ensures that the value can stack up and be verified by the buyer’s bank’s valuation.

3. Practice due diligence

The seller will need to provide the buyer with relevant information about the practice and it is best to get this information to the legal teams as soon as possible to enable any issues to be resolved early. This includes documents and information such as commercial contracts, equipment inspection certificates and maintenance agreements, up-to date accounts, NHS activity statements and staff contracts.

4. Property

The buyer is likely to be obtaining finance for the purchase and the bank will be taking security for the loan over the property from which the practice operates – whether it is freehold or a lease. Accordingly, the seller should ensure that the property title deeds, buildings insurance and planning permissions are to hand to facilitate the change of ownership and that there are no nasty issues lurking in respect of these.

Where the property is occupied under a lease the landlord will need to be involved in order to transfer the lease or grant a new lease direct to the buyer. Also, the term of the lease must be sufficient for the bank’s lending purposes – again your dental specialist solicitor can assist here.

5. Market via dental practice selling agents

Both sellers and buyers should register with a dental practice selling agent, like Mediestates, who will vet the practice and the buyer so no time is wasted on the wrong match. Let the third party agent take the strain of the negotiation process. Specialist and experienced dental professionals are instrumental in ensuring a successful acquisition that protects your needs.




Practice One
Practice Location
- this practice was set up from squat by the current principal in 2008 and has grown rapidly since opening. Located within a popular seaside town, the practice occupies a converted residential property with ample patient parking. There is high footfall in the surrounding area with excellent transport links.

Type of Practice - this mainly NHS practice has four surgeries occupied by the principal, two associates, one foundation dentist and a part-time hygienist. The outgoing principal was keen to retain the freehold and create a new lease for an incoming buyer.

Financials - the practice completes 21,500 UDAs per annum with an NHS contract value of £540,000. In addition, the practice has a capitation scheme worth £30,000 and generates £120,000 turnover from fee per item work.

Buyer Appetite - despite the rural location buyer appetite was strong, with 865 web views of the practice and 268 general market buyers receiving full sales information. This resulted in multiple viewings and offers for the practice.

Reason for Sale / Incoming Purchaser - the outgoing principal was looking to reduce their managerial responsibilities but was able to retain a clinical presence at the practice postsale. The purchaser was a first-time buyer looking to work within one of the surgeries full time.

Price Achieved - £1,050,000 inclusive of goodwill, equipment, fixtures and fittings. Buyer interest in the practice helped escalate the sale price above the original asking price.
Practice Two
Practice Location
- located within the Midlands, this state-of-the-art practice has been operating for over 25 years and under current ownership since 2008. The practice is situated within a small village, close to other amenities and with plentiful parking facilities.

Type of Practice - the practice has three surgeries and offers mainly private dentistry within purpose built premises. The premises are occupied on a leasehold basis with potential for additional surgeries within the premises.

Financials - annual turnover is £250,000, which is made up of a small NHS contract of £19,000 for 750 UDAs, capitation income of £40,000 and £191,000 fee per item income. The practice is efficiently staffed with one full-time dental nurse and one full-time receptionist and generates a good level of profitability.

Buyer Appetite - we marketed the practice to our general market with 906 buyers viewing the practice via our website, 146 buyers receiving detailed sales brochures and eight viewings being carried out.

Reason for Sale / Incoming Purchaser - the principal was selling the practice to pursue other business opportunities and therefore wanted to exit the business immediately on completion of a sale. The incoming buyer had a small portfolio of dental practices and was keen to grow the business quickly as an investment. The transaction took six and a half months from marketing to completion.

Price Achieved - £336,000 inclusive of goodwill, equipment, fixtures and fittings.
Practice Three
Practice Location
- established back in the 1950s, the current principal acquired the practice in 2007 as a going concern. It is located close to a main high street within a London borough and benefits from lots of passing trade.

Type of Practice - this is a two-surgery NHS practice with one associate and a part-time hygienist. The leasehold premises are within a converted residential property and provide plenty of expansion space on the first floor, which is not currently utilised.

Financials - the annual turnover is derived from 92% NHS income and 8% fee per item income. The practice has an NHS contract value of £255,000 for 11,000 UDAs, representing a moderate UDA rate. The majority of work is split evenly between the principal and associate with both contributing to UDA completion and fee per item income.

Buyer Appetite - the practice was put out to our General Tier buyers and generated interest quickly with 29 viewings taking place within two weeks of first marketing. Multiple offers for the practice were received from our Priority Tier buyers.

Reason for sale / Incoming Purchaser - the vendor was looking to reduce responsibilities prior to eventual retirement and was open to options regarding a post-sale exit from the business. This suited the incoming buyer who already owned a practice and was purchasing as an investment.

Price Achieved - £590,000 inclusive of goodwill, equipment, fixtures and fittings.
Posted by: Leah Groves - Fisher Jones Greenwood on 30 Dec 2016

General Buyer Terms 

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 1998. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
Your shortlist contents will be included in this contact submission