The UK Dentist’s Short Guide To Selling A Dental Practice
A handy list of things to bear in mind if you are considering selling a dental practice.
As the inherent value of goodwill enjoyed by many dental practices in the UK is currently featuring at a significantly higher level than was previously the case, the practice owner should consider a number of options with regard to the potential future sale of their dental practice.
As long-established specialists in the valuation and sale of dental practices throughout the UK we have put together a checklist of things that you should take into account before arriving at a final decision with regard to selling a dental practice.
Thinking Ahead & Planning for the Future is Essential
It's not at all unusual for us to speak to principals who may be thinking of selling a dental practice somewhere in the UK, only to find out that they have made financial commitments, perhaps by booking a long holiday or paying a deposit for a nice new car without having first completed the essential task of having their practice independently and professionally valued.
Good succession planning is also important in these transactions and it is vital that when you start thinking “I want to sell my dental practice,” you should start to carefully consider all of the available options even if you don't plan to make the sale for some time to come.
You Owe It To Yourself to Get An Up-To-Date and Independent Professional Dental Practice Valuation
We simply cannot over emphasise this point - it is absolutely essential to always obtain a full, professional and independent valuation for your UK dental practice. If a potential buyer approaches you unexpectedly and makes you an unsolicited offer for a private sale, don't go forward with any offer until you have satisfied yourself that you know beyond any doubt what your dental practice is actually worth if placed on the open market. This value can only be reliably established by taking the time to have an independent professional valuation carried out for the dental practice concerned.
After having had a valuation carried out on their dental practice, many practice principals are very pleasantly surprised to find out just how much their dental practice would be likely to sell for if it were to be placed on the open market and properly marketed.
Even if you have already agreed to sell your dental practice to one of your associates, be careful not to make the mistake of underestimating the complexities and time consuming effort and skill that is involved in successfully conducting such a sale. It is essential to employ the services of a reputable and suitably experienced dental practice sales agency to handle the sale and to act on your behalf just as soon as you begin to think “I want to sell my dental practice.”
It’s Not a Secret – You Will Need the Services of a Dental Practice Sales Agent!
As with any other type of professional service, make absolutely certain that you select the right agent for the job. It is not unknown for and agent to be contracted to work on behalf of the dental practice seller but in fact to be paid by the purchaser.
In our view, this practice can often cause a conflict of interests, and it’s well worth bearing in mind that there really is no such thing as a free lunch and that one way or another the services of the sales agent have to be paid for if they are to protect your interests!
It is an open market so make sure that you use that fact to your best advantage and always ensure that the dental practice sales agent you appoint will, in fact, place your dental practice for sale on the full open market and that he or she will not restrict the sale to a group of pre-registered or otherwise preferred buyers as this could easily restrict and constrain the selling price.
When you finally find a buyer and everything is all lined up ready for the sale, don’t fall into the trap of losing motivation or "taking your foot off the gas". It is very important that during this period you should strive to keep the practice turnover maintained because any potential buyer will no doubt be closely monitoring the performance of the business and may demand a reduction of the asking price in the event of turnover dropping off.
It’s a Great Time to be Thinking "I want To Sell My Dental Practice"
Yes, if you are starting to think that you might benefit from selling your dental practice, it is as well to be fully aware that it is very much a seller’s market at the moment.
Why do we make a statement like that? Well, the main reason is that currently we have almost 4,000 dentists who have registered their interest and are actively looking to purchase a dental practice in England or Wales as soon as they can.
Furthermore, we know for sure that they are not simply browsing, we have spoken to them in some depth and are convinced they have a genuine interest and that they also access to sufficient funds to make such a purchase.
Another point worth noting is that there are some 12 banks who now regularly lend to dentists wishing to buy a practice and it seems that the funds are definitely available to make it realistic for the potential buyer to pay the going rate for the sale when you start to think “shall I sell my dental practice?”
Always Bear In Mind – Corporate Buyers May Not Want To Offer the Full Market Price
There are plenty of corporate buyers in the market for those wishing to sell a dental practice. These organisations are very active in the dental practice market place and many will approach principals directly asking them if they plan on selling their dental practice.
Although many will find it to be very flattering to be contacted in this way and you should, of course, always consider any offer on its merits, our advice would be to never say yes to any such offer until you have involved a specialist dental practice sales agent to work on your behalf to ensure that you are not underselling your business and perhaps tying yourself into unwanted earn outs and other onerous targets that could so easily be avoided with a little expert help.
Also, please do remember that corporate buyers do this for a living and it is unfortuately often the case that the original offer placed on the table does not ultimately resemble the final offer that you eventually receive.
If then, you do decide to opt for a private sale make sure that you always protect yourself by employing the services of a professional, specialist dental agent – we consistently deal with a very high percentage of the private dental practice sales that are made in the UK - you will find our fees to be well worth it in the final analysis!
Leasehold Premises – Make Sure You Know How Long Is Left on The Lease?
Are your dental practice premises freehold or leasehold? If the answer is leasehold there's something you should check in plenty of time - you should always try your best try to make sure that there is a minimum of ten years left to run on the lease.
If this proves not to be the case then do try as hard as you can to renegotiate the term of the lease and try to aim for a period of at least 15 years. A longer lease like this will make it much easier to sell your dental practice. If, on the other hand, yours is a freehold property, you should always make sure that you arrange for an independent commercial valuation to be obtained.
Always Make Sure That You Understand the Applicable Capital Allowances That Are Available When You Sell a Dental Practice
If you own your premises freehold then it is important that you are aware of the situation regarding Capital Allowances and how those allowances apply when you are involved in selling a dental practice – most people are pleasantly surprised when they find out how beneficial they can be for the seller!
It is also well worth noting that many principals who decide that they want to stay on after they have sold their dental practice and continue to work, usually as an associate. If this applies to you, make sure that you consider all of your future options – if you did stay on at the practice, how many days would you really want to work each month and what sort of fee would you need, or want, to charge?
In a seller’s market, as it is now, it will pay you over and again to do all the necessary research and make sure that you do everything else necessary in order to make sure that you get the best possible result when you sell your dental practice and we hope that this brief guide has been of help to you.