Author: Luke Moore – one of the Founders and Directors of Dental Elite
The goal for any principal selling a dental practice is to achieve a good price with as fast and smooth a transaction as possible. The complexity of the process and number of variables involved mean that this is not always the case. However, with expert support and an understanding of the potential pitfalls to avoid, principals can increase the chances of success while mitigating any challenges along the way.
Money matters
The starting point for any business sale is to ensure that current and past accounts are organised and ready for inspection by the valuers, the banks or lenders and the buyer. Any errors, missing information or difficult to read documents will likely delay the sales process. It may cause further concern for the buyer, who might be apprehensive that you are trying to hide something. It could also suggest poor business management, which weakens your bargaining power should the buyer request an adjustment to the practice valuation during the process.
A valuation you can trust
Beyond the business accounts, another financial consideration is the valuation of the practice. This is a crucial initial stage of the process, and one that must be completed diligently. Determining a number is only half the story – you must also be able to support the figure with calculations that justify the value estimated. Should the buyer’s lender start asking questions or require evidence of the business valuation figure, providing the justification will ensure no delays or revaluation requests.
A multi-faceted process
The actual process of selling a dental practice is another area that can cause all sorts of delays and issues for vendors who are not fully prepared. There are a number of tedious and time-consuming tasks to complete, many of which require meticulous attention to detail to avoid errors and setbacks. The CQC transfer of ownership is well-known to be a monotonous step in the workflow and one that vendors should begin early on in the process to prevent delays. The same can be said of transferring NHS contracts.
Property
There are several aspects to consider about the property in which your practice is situated. For any leasehold properties, it will be necessary to extend the lease where possible – shorter contracts will reduce a buyer’s ability to secure a loan. So too will any property defects, Land Registry discrepancies, asbestos reports, and a low Energy Performance Certificate – anything below an ‘E’ grade will require adjustments to the building to increase the rating prior to sale. With regards to any contracts in place regarding the property, schedules of condition will need to be reviewed and fulfilled, with any major changes discussed and agreed with the landlord before going to market.
Staff
The team is one of the most important yet challenging factors to manage throughout the practice sale. They are the heart of the practice, the faces that your patients know, and the people who drive success across your practice. A sale can be a difficult time for team members, so deciding when to tell them, and how much to involve them in the sales process will need to be determined on an individual basis. Ideally, efforts should be made to retain staff so as not to affect capacity to see patients and therefore maintain the valuation. That said, some principals may want to implement pay rises just before going to market in an effort to keep the team happy. This should always be approached with caution because it will impact the value of the business. It is more important to align wages with market averages for the area and perhaps offer bonuses or incentives in other ways.
Avoiding the great wind-down
Of a similar nature is the work principals complete in the run-up to sale. The temptation is often to take your foot off the pedal as you wind-down to retirement. However, this should be avoided wherever possible as it could significantly reduce the value of the business at a time when you want to be optimising its worth. By setting the wheels in motion earlier, you will have more time to grow the practice in the years prior to retirement, allowing you to maximise your monetary reward before you want out.
Expert support
All of the above is made simpler when you seek the support of specialists in the field. From accountants to lawyers, valuers and brokers, working with organisations that understand the unique nuances of dentistry is crucial. Dental Elite is renowned for its detailed understanding of the market, and for utilising this to help vendors achieve the best possible deals for the businesses they have worked so hard to build. The team includes individuals with expertise in each specific area of the process, from optimising value to marketing the practice, managing the transaction and beyond.
Selling a dental practice is a journey, requiring careful preparation and planning. With an understanding of how it all works and the key pitfalls to avoid, principals can protect their legacy while reaping the maximum reward for their business.
For more information on Dental Elite visit www.dentalelite.co.uk, email info@dentalelite.co.uk or call 01788 545 900
