As an individual buyer, making a huge financial commitment to buy a dental practice can be a daunting experience. In this complex, ever-changing industry, with constantly evolving external pressures, specialist knowledge and expertise matters. When considering investing in a practice, working with a specialist finance broker can give you all the professional tools and confidence you need to successfully complete a purchase on the most competitive terms possible.
A specialist broker will have great insight into the sector as well as established connections to quickly resolve the many and varied complex processes that must take place between stakeholders. They are aware of specific market trends, and as they are governed by regulations set down by the Financial Conduct Authority (FCA), their advice has to be impartial. They can assist you in assessing and mitigating against all the financial risks associated with the process of acquiring a business. They can assist you in finding the right kind of lender that suits your circumstances, and they can help you assess possible weaknesses as well as strengths of the businesses you are looking to buy.
Tailored support
In the initial application and consultation, your finance broker will analyse your assets and liabilities to create a theoretical budget. Having mapped out the kind of budget they have to play with, clients are advised as much as possible to get out there and look at possible acquisitions in person.
As you work with your broker on financial options, as well as verifying the metrics around your prospective practices’ valuations, they should examine how well the possible businesses might perform under pressure from external as well as internal factors. Ideally, they will provide stress tests, generally designed for financial institutions, which are simulated scenarios designed to test resilience in the face of various hypothetical pressures. The likely performance of a business under different difficult circumstances will affect measures of the practice’s reasonable viability, which may in turn affect the broker’s assessment of the business’s true value.
A finance broker should also help prospective buyers scrutinise detailed accounts provided by the vendor. These should be made available for the previous three-year period. These should have clear detail around every expenditure, including wages, lab costs and material costs. The three-year period gives enough data to spot trends, determine reasonable running costs and postulate how the business responds to pressures throughout a sustained time period. It also prevents a valuation based on a single year of activity, where they may have adjusted costs or payment schedules to make their cost to profit ratio look more favourable.
The specialist broker and the relationship with lenders
The benefits of using a specialist dental broker are perhaps most apparent once the acquisitions process reaches the point where you are looking for lenders. The team should work closely with you to evaluate the personal benefits and risks of securing a bank loan with another property depending on your circumstances, and will help you assess how this could be avoided if not advised. Your finance brokers can scrutinise each option with you, looking at comparable rates of interest, whether a fixed or variable rate best suits your needs, and whether a loan should be fully or partially amortised. They will also ensure the terms and conditions of each option worth considering are in your best interests.
Dental Elite operates DE Finance independently to negotiate dental practice finance for prospective buyers. The mutual trust between DE Finance brokers and lenders built over our many collective decades’ worth of experience, means they are able to secure the most favourable rates possible on behalf of clients. The DE Finance team approaches all lenders, writing a bespoke tender to ensure buyers connect with the right institution. Our team’s established relationships mean direct communication is more effective and this can save days or even weeks from the tender process. Currently with the right approach, banks are more than eager to lend, as demonstrated by the £80 million the team has brokered in dental acquisitions just in the last year.
Whatever your personal preferences or needs and however your circumstances are assessed through your financial broker’s services, you will benefit from a team that will stay with you until completion to ensure your unique needs are met. From application to drawdown, ensure you choose a finance team that is with you all the way.
For more information contact
the Dental Elite team on 01788 545900
https://dentalelite.co.uk/
Author: Luke Moore
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.
