Buying or selling a dental practice
Read time: 5 mins Added: 19/06/2023
Whether you are buying or selling a dental practice you want to make sure that you are getting the right price and the sale goes through smoothly.
Dentistry is a highly specialised and dynamic sector, so obtaining quality and professional advice is crucial. We asked various experts at Christie & Co, the only RICS (Royal Institution of Chartered Surveyors) regulated firm dealing with both accredited ‘Red Book’ valuations and dental practice sales, to offer their market-tested advice. This guide to buying or selling a practice is based on their experience, sector familiarity and insights into market trends.
Selling a dental practice
This short guide highlights the different stages of selling a dental practice. As it can be a complicated process, a specialist dental agent can be extremely helpful in guiding you every step of the way through to contract exchange and completion.
Stage one – start by having an initial chat with an appropriate agent about your plans to sell. The agent should provide you with some general advice about the market in your area, the type of buyer and general pricing parameters. They should also be able to showcase their services and credentials – avoid the agents who suggest you can ‘sell your practice for free’ – those agents take fees from the buyer which is a clear conflict of interest.
Stage two – if you wish to proceed, then terms of engagement will be agreed, and the practice would need to be prepared for sale. Ideally, your specialist agent will live and work in your area and so will handle the sale right the way to completion for continuity of service.
Stage three – marketing collateral is produced showcasing your practice. An ‘Information Memorandum’ is prepared which is a confidential document and gives full details about the business. It typically would include full colour photography, a virtual tour and floor plan so that interested parties can make an accurate assessment that it is suitable for their needs before visiting.
Stage four – the practice is launched to the market. It’s sensible to shortlist quality purchasers who can obtain funding to avoid wasted time – your agent should guide you here.
Stage five – your specialist dental agent will qualify interested buyers and arrange viewings. These generally take a couple of hours each and are a good chance for both buyer and seller to get to know each other and decide if the buyer is a good ‘fit’ for the practice and patients.
Stage six – many dental sales attract multiple offers in which case a date is set for ‘best and final’ offers. Your agent should manage this process for you and report back with a detailed analysis of the bids to enable you to make an informed decision about which is best for you and the practice.
Stage seven – assuming an acceptable offer has been received, ‘Heads of terms’ are negotiated by your agent between you and the buyer. This captures the principal terms that have been agreed and is then forwarded to solicitors and accountants who begin their phase of work on the deal.
Stage eight – the transaction progresses, the buyer and their advisers carry out ‘due diligence’ which is a detailed appraisal of the business including all legal and financial matters. It is very detailed and can take a number of weeks. If the buyer needs bank funding, then a formal independent valuation will be needed as a basis for a lending decision. Underwriters will confirm the loan to be agreed.
Stage nine – the transaction advances and both buyer and seller are closely and heavily involved in planning for completion. The CQC registration process is managed either personally by the buyer/seller or typically via the solicitors or a third party.
Stage ten – contracts are exchanged, making the deal unconditional unless specific conditions have been included. Completion follows on the same day, or in the case of an asset sale a few days later.
Buying a dental practice
Buying and running a practice is an ambition for many qualified dentists. There are several benefits to becoming your own boss; having the autonomy to decide what work you will be doing and when, and of course, reaping the financial rewards.
Here we provide some ‘top tips’ for what to consider when purchasing a dental practice whether you are a first-time buyer or looking to expand your current portfolio:
Save for a deposit
The dental market is often classed as a ‘green light’ sector when it comes to funding. But it is important to be realistic and, in most cases, you will need a deposit of between 10% – 20%. Start saving for this as soon as you know you want to buy a practice – there is no point in looking for a practice, falling in love with the opportunity and then realising that you cannot afford it.
Start looking for a practice
Register your interest for free with a dental agent. Some companies who sell dental practices, charge buyers fees to subscribe. A good dental sales agent will not ask you to pay the sales fee for buying a practice. This means your sales agent will take a fair approach when selling a practice for their client (the seller), by supplying details of the opportunity to all buyers; giving you the same chance to buy like everyone else.
Get help from trusted advisers
Speak with a specialist dental solicitor and accountant – they are dental sector specialists and have a wealth of knowledge. It is essential that you surround yourself with these professionals and tap into the right advice and support to ensure that your acquisition is as seamless and stress free as possible.
Be prepared
If you successfully buy the first practice you have enquired about, then you are doing better than most. These things take time and there is plenty of competition from like-minded buyers. Don’t be too disappointed if you lose out on the sale, there will be other opportunities. Controlling your own destiny and securing your future in dentistry by buying your own practice is an amazing thing to do, be confident in your approach.
Since the beginning of 2019, the Christie & Co Dental team has inspected, advised on or valued over 1,600 dental practices. Whether you are buying or selling, Christie & Co is always happy to help.
Authors: Simon Hughes, Managing Director – Medical, Paul Graham – Head of Dental, and Christopher Vowles – FRICS, Head of Medical Valuations at business buying and selling experts Christie & Co.