When purchasing a dental practice, a key element of the process is ensuring due diligence. Examining all aspects of the business enables you to fully understand what you’ll be taking on when the sale completes. Here, we take a look at what you need to do to ensure this process is carried out thoroughly.
Examining Every Detail
Due diligence gives the buyer a chance to learn everything there is to know about the dental practice they wish to buy. Going it alone is never a good idea. It’s essential to use the services of an experienced solicitor who has worked with dental practitioners before. The information that is supplied during this process is often overwhelming, so using a solicitor will ensure that nothing gets overlooked.
The process of due diligence involves examining a number of aspects including patient activity status and records to obtain an overview of the practice’s patient base stability. The practice equipment should also be checked for regular servicing and any service agreements that are in place which must be continued post-sale.
Information about staff National Insurance and PAYE, salaries, employment statuses and contracts must also be obtained. It’s the first step towards learning more about your future employees.
The practice’s financial reports must also be examined in depth, including tax returns as well as a minimum of three years of profit & loss statements. That will allow you to assess the successfulness of the practice. As well as the accounts, you’ll need other key documentation such as inspection reports, policies, data protection registration, CQC registration proof, insurances, and information about any current or historical claims.
The building’s quality itself forms another key aspect of the due diligence process. You need to view evidence of asbestos reports, building regulations, D1 certification, risk assessments, the energy performance certificate, and details regarding the set up of the practice.
If you’re purchasing Limited Company shares, it’s essential to bear in mind if historical complaints have been made against the practice since they’ll be your responsibility after the sale.
This makes the process of due diligence when completing a Share purchase more complex that that when completing an Asset purchase since there is no transference of historical liability with Asset purchases. Your solicitor can help ascertain if you face any significant risks and, if so, whether your seller will be required to issue a warranty against them.
Usually, any practice you buy will have an NHS contract and you will be liable for it post-sale. You need to understand the contract and be aware of its details to make sure the right liabilities and assets are being transferred in the sale. Not only should you receive a copy contract, but you should also obtain any correspondence with the LAT or variation notices to let you know where the NHS contract is currently.
The process of due diligence is a lengthy one, but it enables you to fully understand every aspect of the dental practice you’re buying. When carried out properly with help from a skilled dental solicitor with experience in the field, you buying process is sure to run more smoothly.