Consider How You Look to the Banks
You need to think about how you look to the banks as a possible borrower. Banks and other financial lenders need to know that you are a safe investment.
You have the qualifications to prove that you know your stuff when it comes to dentistry. You also need to be able to prove to the banks that you know your stuff when it comes to business.
Does your CV look like you are ready to buy and successfully manage a dental practice? Make sure you clearly show your dental and management experience such as courses, mentoring staff, training staff and dealing with CQC.
You also need to think about your personal and business finances.
Have a look at your financial track record, how you have managed your personal finances e.g. do you have high credit card balances? Have you demonstrated an ability to save?
How strong are your associate accounts, would they be strong enough to demonstrate that you can cover the workloads and UDAs at the target practice?
If you can show evidence of timely payments of debts, the ability to prepare cashflows and a good understanding of accountancy, you become a much safer bet in the bank’s eyes.
Find the Right Practice
It may sound obvious, but it’s worth pointing out that you need to make sure you are buying the right practice for your vision, goals and personal situation.
As the saying goes – location, location, location. Yes, a glamorous and famous street in Central London might have been your dream, but is it realistic, is it affordable, is it practical? Maybe you’ve always dreamed of setting up shop in the small village you grew up in, but is there enough demand to warrant it?
You may need to move further than you planned or maybe even to somewhere you’ve never heard of. Don’t rule anywhere out and make sure you consider the entire nation. There are some great practices out there!
Think about what services you want to provide too. NHS contracts might guarantee income, but they have their own drawbacks as well. Private dentistry requires a lot more effort in terms of marketing, but the financial rewards are potentially far greater.
It’s essential that you do your own market and demographic research before you buy any practice. What services does the area want? What kind of patients are you going to be attracting? Are there more families or young professionals locally?
Make sure you’re getting the right price for your new practice. Don’t pay over the odds because the practice has room to grow. Only pay exactly what the practice is worth.
There are many factors that you will need to consider when purchasing a dental practice and it can be difficult when you have finished a long day in the practice.
Our Buyer’s Advisory Service can provide you with the answers to these questions.
Be Diligent with Due Diligence
The due diligence is one of the most important steps when buying a dental practice. The better the due diligence, the more equipped you will be as a buyer to make an informed decision.
Remember that the selling agents will make the practice seem like the best option on the market. It’s the job of due diligence to figure out how much of that is true and to discover any issues or potential problems that you need to be aware of.
In most cases you are purchasing the goodwill of the business and this may have been undertaken by associates. Does the practice have a detailed drafted agreement in place with their associates?
Is the Practice Lease term as expected? Banks usually match the lease term to the loan term. If the lease only has 2 years remaining, then the loan term will normally be for 2 years.
Leave no stone unturned and make sure everything is examined in microscopic detail. You cannot put enough time and effort into the due diligence!
There are so many different aspects that make up a business such as finances and accounts, staffing contracts, property agreements etc. It is essential that each one of them is examined in detail so you have the clearest picture possible of the business you are purchasing.
Hire a Specialist Dental Solicitor
Therefore, a good specialist healthcare solicitor is vital when buying a dental practice. Make sure your solicitor has specific knowledge and experience in the UK’s dental sector!
The healthcare sector has many nuances that are very sector-specific and you will need a solicitor with experience within this sector to make sure that they are dealt with correctly.
The NHS require a certain timeframe in which to complete a transaction. For instance, they usually want notice within 28 days of the first of the month. If your solicitor is not aware of the notice periods and the particular days that the NHS want notices served, this could put your purchase at risk, or at least delay it.
Raise the Right Finance for Buying a Dental Practice
How are you funding the practice purchase?
When you’re buying a dental practice, most banks will expect a deposit of 10-20%, with the remainder of the purchase financed via a loan. There are several options available to you when it comes to acquisition finance. Shop around the different financial lending institutions, consider different funding options and choose the one that best suits your situation.
Just as we’d advise contacting an experienced dental solicitor, we’d also strongly advise you contact an experienced commercial finance broker.
Yes, you could go to the different banks and lending institutions yourself and get a range of finance offers. However, a commercial finance broker with experience and networks in the UK’s banking sector, like Samera Finance, will be able to source better deals and negotiate more favourable terms.
Finance brokers know what the banks are looking for in terms of a lending prospect. They know what banks want to see in an application. They know what a successful business plan looks like. They know how to make sure your application is approved for the best deal for your business.
Buying a Dental Practice: Get Started
When buying a dental practice (especially if it’s for the first time), you need the competent hands of qualified professionals. Not only have we been helping the UK’s dentists to buy, start and sell dental practices for over 20 years, we are dental practice owners ourselves! We know what it takes to buy the right dental practice, we can help you find it, buy it and get it up and running.
Book a free, no-obligation consultation with one of our team at a time that suits you (including evenings). We’ll call you back and have a chat about how we can help buy your dream practice.
With Samera Business Advisors you can rest easy knowing that your investment is secure and your future is brighter. Contact us today so we can help plan for your tomorrow.