Many dentists aspire to own their own practice. It isn’t of course for everyone, there are risks in being a practice owner, but if run successfully, the longer term rewards can make all the hard work worthwhile.
Buying a dental practice can sometimes feel like a pretty daunting venture and the number of aspects which need to come together to help you achieve your goal can seem overwhelming. However, like many things in life, with the correct advice and team in place, you will get there.
Banks remain generally comfortable to lend to dentists who wish to purchase a practice, (provided of course that everything stacks up from their point of view!) and it is still very much seen as a “green light” sector. So obtaining funding should hopefully not prove to be problematic.
Once you have identified a suitable practice (you should consider whether you want NHS / private or a mix of the two), your solicitor (who should be a dental specialist solicitor) will need to start the legal due diligence process. The purpose of the legal due diligence process is essentially to investigate the business activities and general financial condition of the practice in question, in order to allow you (and any funder who may be involved in financing the purchase) to identify and address any potential risks.
Whilst the majority of practices won’t have any major issues, there are certain common “problem” areas which occur repeatedly and which can cause delays or, in extreme cases, prevent the practice being purchased altogether. These include:
- The surgery was extended or renovated at some point in the past, but the seller doesn’t have all of the local authority planning and building consents for the works.
- There are no written contracts in place with associates or hygienists – this increases the risk of a high grossing associate leaving without being restricted from working nearby or seeking to take patients with them.
- There are outstanding patient complaints, or is a history of patient complaints – this can potentially raise concerns regarding standards of treatment.
Furthermore, the staff are a key element of any practice, and you essentially “inherit” them from the seller, with their terms and conditions and service history intact. Your solicitor should therefore check these terms and conditions thoroughly, to ensure that they are all in order and you know what you are taking on.
These are just a few examples of issues which we regularly encounter when advising buyers, but they hopefully help to highlight some areas to focus on to minimise the risk of delays or issues arising further down the line.
Whilst the due diligence process is underway, your solicitor will also be drafting and negotiating the purchase agreement, which is the legal document governing the purchase of the practice. It is really important that this document contains dental sector specific warranties and, where required, indemnities, in order to ensure that you are getting the necessary comfort regarding the practice you are purchasing.
Buying a practice is one of the most important steps which you will take in your career – you may only do it once, or you may enjoy being a practice owner so much that you decide to purchase multiple practices! Whichever route you go down, we cannot stress enough the importance of engaging a dental specialist solicitor, accountant and bank to ensure that all aspects of your purchase are dealt with properly. Remember - achieving a goal is never a process that should be left to chance!
