The 10 things to consider before selling your dental practice
Featured Products Promotional FeaturesPosted by: Dental Design 25th February 2023
If you’re thinking about selling your dental practice in the near future, there are many things you must consider to ensure a smooth process. Let’s explore the 10 factors that you need to bear in mind prior to your sale.
Accounts: When selling your dental practice, everything must be watertight and organised. It’s also vital to ensure all of your information is up-to-date, especially as we’re slowly exiting the COVID-19 period. If you’re looking to sell your business but haven’t completed your latest set of accounts, this could delay you going to market.
Property: Factors concerning your property can also cause significant hold-ups in the sales process. For example, if you have an Energy Performance Certificate (EPC) that is lower than a grade E, you’re not legally permitted to either sell that property commercially, or grant a lease.
This can be easily rectified, however, if you get your EPC certificate well-ahead of your sale (they are valid for 10 years). This gives you plenty of time to assess your property and make any relevant changes – it may be as simple as changing your lightbulbs, or installing double-glazed windows.
Team: There’s a lot to consider when it comes to your team and selling your business. However, in terms of valuation, it’s important to think about how your team may affect your value. Pay rises awarded in the run-up to your sale could discount your valuation as your staff are transferred over to the new principal.
Other types of rewards for staff could include non-contractual bonuses, which will be appreciated by your staff members and will save you money in the long-term. In the run up to your sale, focusing on ways to incentivise your staff that isn’t in the form of a pay rise may help to avoid this issue.
NHS targets: It’s important to stay on target for your NHS contracts. If you’re struggling, you can try and get a temporary target to avoid a breach of contract, which could affect your sale. Buyers may not want to invest in a business with a history of NHS contract breaches, especially if there’s a chance the NHS will look to take action. Try and find ways to stay on target – for example, could you maximise surgery open hours? If you’re going on holiday, could you get a locum in to cover your hours?
Plan: This may seem simple, but it’s prudent to think about your reasons for selling, and work out if now is the right time for you. Think about when you actually want to give up dentistry, drop days and work back from there to figure out when is the right time to sell. And, be prepared. At the moment, the economy is in a precarious place and this could affect your buyer’s behaviour. For example, they may find that they cannot afford the deferred consideration – do you have a plan/protection in place for this kind of situation?
Get valued early: The earlier you get valued, the more your dental adviser can make recommendations and help you tweak areas in your business to boost its value. Dental Elite offers a free practice ‘health check’, which can be completed prior to your sale and will give you a chance to explore areas that could be enhanced. We can touch base with you and keep working with you leading up to sale to ensure that you’re achieving what you want to be achieving.
Widen options as far as possible: I have worked with practices who have had direct offers from corporates, and have accepted them straight off the bat. Particularly as we move into a potentially more challenging market, don’t let your sale be talked down. The market is still competitive! Widen your options, and you’ll set yourself up for a better chance of the most competitive sale process.
Move quickly: The dental market is always moving – as soon as you get an offer on the table that you are happy with, move fast. Do your due diligence as soon as possible and sort your heads of terms (HOTs) at the outset, so you’re not rushing to negotiate terms as you near your sale end.
Importance of good advisers: In line with the aforementioned point, make sure you work with specialist dental advisers who understand the market, and will be able to work at your pace.
This is also pertinent with accountants. A large amount of our sales are limited company sales, which means that the vendor must do a ‘Net Asset Value Adjustment’ as part of the sale. Corporate sales are fairly new in the industry, which means you may come across accountants who don’t quite understand the process. So, make sure you work with an adviser who knows what they are doing.
Think with a tax head: When you go to sell your practice, it’s vital to ensure that you leave yourself in the most financially-beneficial position. Again, you should consider gaining valuable and knowledge advice, well in advance, from a specialist who will make sure you are in the most favourable position prior to selling.
For more information contact Dental Elite. Visit www.dentalelite.co.uk, email info@dentalelite.co.uk or call 01788 545 900
Luke Moore is one of the Founders and Directors of Dental Elite and has overseen well in excess of 750 practice sales and valuations. With over 19 years working in the dental industry, Luke has extensive knowledge in both dental practice transfers and recruitment and understands the complexities of NHS and Private practices.
