Financial Due Diligence

The work in plain English

Verifying the numbers before you commit

Financial due diligence is the work of testing whether the numbers a vendor is presenting actually reflect the business. Income recorded against what was banked. NHS contract performance against what was claimed. Costs that look like they should drop out under new ownership against ones that won’t. The deal structure the seller is asking for against what the cash flow can support.

It matters because the headline price is a multiple of EBITDA, and a vendor’s stated EBITDA is almost never what a buyer should actually be paying for. The diligence report normalises that figure, gives the lender confidence to fund the deal, and gives the solicitor enough cover to draft warranties. For sellers, the same work commissioned pre-market surfaces problems while there’s still time to fix them, before a buyer’s accountant finds them and uses them to chip the price.

Most buyers come to us after the headline price has been agreed and the heads of terms signed – that’s the point the lender wants the report. Sellers come to us earlier, 12 to 24 months from market, so the practice goes out to buyers with the diligence already done.

Financial due diligence sits inside our wider Buy a Dental Practice service for buyers, and alongside Sell a Dental Practice for sellers preparing for market. For the deeper background on how dental due diligence differs from generalist accountancy due diligence, see our Learning Centre article on financial due diligence.

Buyer or seller, same technical team

We run buyer due diligence and vendor due diligence with the same accountancy team. The work is technically identical – same UDA verification, same income reconciliation, same balance sheet review – but the reports are framed for different readers. Buyer-side work is read by the buyer’s lender and solicitor. Vendor-side work is read by the buyer’s accountant when they come in to do their own work.

Decision points

The three points in a transaction where financial due diligence typically lands

Point 1 – Buyer has signed heads of terms and the bank wants diligence

This is the most common entry point. Heads of terms agreed, exclusivity period running, the lender’s credit team wants a diligence report before they’ll commit. The buyer instructs the work at this stage and it runs alongside legal due diligence over four to six weeks.

Point 2 – Buyer is between viewing and offer

A pre-offer review of the sellers’ accounts before committing to a price. Lighter than full diligence, scoped to identify the headline risks (NHS exposure, capacity vs reported revenue, normalised EBITDA range). Helps the buyer set an offer they can defend, and avoids progressing to heads on a deal that won’t pass full diligence.

Point 3 – Seller is 12-24 months from market

Pre-sale vendor diligence run by the seller, on themselves. Surfaces anything the buyer’s accountant will find later, while there’s time to fix it – cleaning up the accounts, restating where appropriate, getting NHS performance and clawback exposure documented. The output is a vendor diligence pack the seller can hand to a buyer’s team alongside the sale memorandum.

The scoping call is the same starting point for all three. We work out which point you’re at, what the deal looks like, and what the right scope of work is before quoting.

What gets tested

Seven areas of investigation, all dental-specific

The diligence work investigates, verifies and understands six things about the target practice:

• The financial affairs of the practice, including valuations
• The market the practice operates in
• The commercial sustainability of the business
• The operational structure, including internal processes and systems
• Any synergistic opportunities or savings arising out of acquisition
• A sensible deal structure

That high-level checklist breaks down into seven detailed areas of investigation, all reported in a format dental lenders and solicitors are used to working with. The scope of work covers the last two financial years plus the period to the latest available management accounts.

• Business description and history – trading activities, CQC registration, premises, ownership history, key changes in financial performance.
• Income and revenue – the largest section. Income split by site, type (fee per item, plan, NHS, sundry), and clinician. UDA/UOA performance review, NHS contract overview, income verified to DPB statements.
• Direct costs – material costs benchmarked, lab costs and terms, rebate arrangements, supplier synergies flagged.
• Staff costs – every role detailed, owner and family member adjustments to market rate, locum usage. The single biggest source of EBITDA adjustment on most owner-managed practices.
• Other expenditure – P&L line review, non-recurring costs identified, costs that fall away under new ownership separated from costs that don’t.
• Balance sheet, cash flow and finance – balance sheet review, fixed asset register, debtor and stock ageing, working capital movements, lease arrangements, provisions.
• Tax position – PAYE/NI, VAT history, corporation tax review including any HMRC investigations, transaction-tax planning steps available.

Plus a systems review covering patient onboarding, income recognition, expenditure handling, payroll, cashbook discipline and practice management software. The handover quality matters as much as the numbers.

Buyer-side diligence

What buyer-side due diligence delivers and how it sits in the deal

If you’re buying a practice, the financial due diligence report is one of the documents your lender will not progress without. It also feeds directly into your solicitor’s drafting of the share purchase agreement – warranties, indemnities, deal structure, completion accounts mechanism.

What buyer-side due diligence gives you

• A full diligence report covering the seven areas above, written in the format dental lenders expect
• A normalised EBITDA figure – what the practice actually earns once owner’s adjustments, family members and non-recurring items are stripped out
• Specific commentary on whether the asking price is supported by the underlying numbers
• Red flags surfaced early, with options for handling them – price chip, retention, indemnity, walk away
• A view on deal structure (share purchase vs asset purchase) and the tax and risk implications either way
• A document the bank will accept and the solicitor can build warranties around

What we need from you

• The seller’s last two years of statutory accounts plus latest management accounts
• The NHS contract documentation and DPB statements
• Any prospectus or information memorandum the seller has produced
• Visibility on the proposed price, deal structure and proposed finance

Speak to Arun or Natasha about buyer due diligence

Arun has overseen financial due diligence on dental acquisitions for over 25 years. Natasha leads day-to-day delivery and the dental accounts team that builds the report. Free 30-minute call to walk through the deal you’re working on, scope the work and confirm pricing before you commit.

The work typically runs over four to six weeks from instruction. Concurrent with legal due diligence, with regular updates on what’s coming out of the accounts. If a finding is significant enough to renegotiate, you hear about it the day we see it – not in the final report.

The diligence report is the foundation that the rest of the buyer-side work sits on. The acquisition finance brokerage your bank wants is informed by the findings. The structure your solicitor drafts depends on what the report surfaces. The price you actually pay reflects what the report shows. Get the diligence right, and the rest of the deal moves.

Pre-sale vendor diligence

Why the smartest sellers diligence themselves before market

If you’re 12 to 24 months from selling, vendor diligence is one of the highest-return pieces of preparation work you can commission. It’s the same technical work as buyer-side diligence, run by you, on yourself, while there’s still time to act on whatever it surfaces.

What vendor due diligence gives you

• The same diligence report a buyer’s accountant would produce, but in your hands first
• Issues identified while they can still be remediated – not when they’re handed to a buyer as leverage
• A normalised EBITDA figure on a defensible footing, ready to feed into the valuation conversation
• Documentation pack that can be shared with a serious buyer to accelerate their own diligence
• A view on whether deal structure should be steered toward share sale or asset sale, given the practice’s tax position
• Confidence going into market that the numbers will hold up under scrutiny

Common findings during vendor diligence that can be fixed before market

• NHS clawback exposure that hasn’t been provisioned
• Owner’s salary or family members on payroll inflating cost base
• Capital expenditure incorrectly booked as repairs
• Plan income recognition that doesn’t match the cash receipts
• Stock and debtor ageing problems
• Tax planning steps still available with 12+ months to completion

What we need from you

• The last two years of statutory accounts plus latest management accounts
• Your NHS contract and DPB statements
• A view on your target sale timeline
• Visibility on whether the practice is going to market via a sales agent or being approached privately

Vendor diligence normally runs alongside the wider Sell a Dental Practice process at the EBITDA preparation stage. The output feeds the sales memorandum and the asking price defence.

When vendor diligence fits inside the Sell process

If you’re using Samera as your sales agent, EBITDA preparation is part of the engagement and covers ground vendor diligence also covers – although on a less formal footing than a standalone diligence report. If you’re going to market independently, or via a different agent, commissioning vendor diligence from us separately gives you a standalone document you can put in front of any buyer’s accountant.

Process

A four-step path from scoping call to final report

• Step 1 – Free 30-minute scoping call. Free, no obligation. We talk through the deal you’re working on or the timeline you’re operating to. By the end of the call we know whether you need full diligence, a pre-offer review, or pre-sale vendor diligence, and we have enough to scope and price the work.
• Step 2 – Engagement letter and information request. Once you’ve agreed to proceed, we send the engagement letter with fee confirmed, alongside a structured information request listing the documents and data we need. Most clients have most of this already – the request makes it explicit what’s missing.
• Step 3 – Diligence fieldwork. Our accountants work through the seven scope areas. Where questions emerge, they go directly to you (vendor-side) or via you to the seller’s accountant (buyer-side). Material findings get flagged in real time rather than held to the final report.
• Step 4 – Final report and debrief. The diligence report is written in the format the lender or your solicitor expects, with an executive summary front-and-back. We hold a debrief call to walk you through findings, what the implications are for the deal, and what the next move looks like. The report itself goes to whoever you nominate – lender, solicitor, sales agent, your own accountant.

For buyers, the typical instruction-to-final-report turnaround is four to six weeks, sometimes faster if the seller’s accounts are clean and the documentation is already organised.

For vendor diligence, the timeline is more flexible because you set it. Three to four weeks of fieldwork is normal once we have the documentation.

Pricing

We don’t publish a fixed fee because the work scales with the size and complexity of the deal – a single-site share purchase at £600k is a different engagement to a five-site group acquisition. The scoping call gives us enough to quote a fixed fee for the engagement. No work begins, and no fee is committed, until you’ve seen and accepted the quote in writing.

What practice buyers and sellers say

Reviews from dentists we’ve helped through transactions

Who you’ll work with

Talk to Arun and Natasha

Financial due diligence engagements are led by Arun Mehra, Samera’s CEO and a chartered accountant with over 25 years on dental transactions, and Natasha Gnanapragasam, Samera’s Accountancy Senior Manager. Arun scopes the engagement, signs off the final report and is on every debrief call. Natasha runs the day-to-day delivery, leading the accounts fieldwork and the dental groups team that produces the report.

Start the conversation

Book a free scoping call

The first conversation is a free 30-minute call. We work out which point in the transaction you’re at, what scope of work you need, and confirm the fixed fee in writing before any engagement begins.

If you’d prefer to send us your details rather than book a call, fill in the form below and our team will be in touch as soon as possible.

• Phone: (+44) 20 7100 8788
• WhatsApp: Message us on WhatsApp
• Email: [email protected]

Common questions

Questions we get about dental due diligence

Learning Centre

Useful reading on dental transactions

The Learning Centre has free articles covering specific parts of the transaction journey. These four sit closest to the due diligence work.

The Guide to Buying a Dental Practice

Chronological route from first viewing to completion day, with due diligence positioned at the post-heads-of-terms stage.

5 Quick Tips when Buying a Dental Practice

What to test, finance options, valuation, legal compliance, transition.

How to Sell Your Dental Practice in 9 Steps

The sell-side mirror, with the buyer’s diligence stage explicitly called out.

The Value of a Dental Practice

How dental valuations are constructed, what drives EBITDA multiples up and down.

Other ways Samera supports practice transactions

What you might need alongside due diligence