Who is selling?
It is often assumed that a selling dentist is someone who wants to retire and stop practising clinical duties on handing over the keys; rarely, do we see this in today’s market. A dentist looking to sell tends to be someone who has decided that they no longer want the responsibility of ownership and management of the practice. Few want to give up on clinical duties, as a result selling dentists are not necessarily those that are of a retirement age.
Does it make a difference on what type of practice you are looking to sell?
Yes – the once popular predominately NHS practice is no longer the favourite. Indeed, we are seeing some sellers hand their NHS contract back prior to a sale. Instead, private practices or a practice where there is scope to expand and specialise tend to be more favourable.
If you are thinking of selling, what do you need to know?
Most selling dentists will engage an agent to help sell and broker the sale of the practice, even if the selling dentist sells to an associate or a friend. Engaging an agent isn’t a necessity but they tend to have access to buyers and much like selling a house, can ensure that the buyer can substantiate their offer and helps to keep the sale on track.
Agents are also sometimes appointed simply to carry out a valuation. One of the biggest frustrations in the market for buyers is an automatic assumption that a practice is worth top dollar, because it is, and to be fair, always has been, a sellers’ market. The problem is that high prices and demand tend to only be there for certain practices, and valuers can value a practice differently. It is always useful to run the valuations past an accountant or a specialist financial advisor or business consultant who can help guide a dentist through the process.
For sellers, I think it is always worth having an open mind and to manage expectations as to what the practice is truly worth. It isn’t always the highest offer that is the best offer.
An offer is just an offer – we see many a buyer come along and offer a price, and after they have looked through the information about the practice, will look to re-structure the price. Just because the heads of terms say that a buyer has offered £x doesn’t mean that is what they will pay.
Get your ducks in order – a well presented practice, sells.
What is due diligence?
One of the first and arguably worst parts of selling is called due diligence. This is where the buyer asks a lot of questions about the practice (and about the property) and we often describe it as one of the worst bits of homework that a seller will do for some time – but the price paid for the practice is the carrot at the end of the stick.
Should a seller talk to the buyer?
We are often asked by sellers whether they can speak with the buyer – absolutely yes. Communication is key. For most sellers, they will be staying on as an associate at the practice and will be asked to sign an associate agreement (usually the BDA version). Talking to the buyer is fundamental.
Is there a difference selling to a corporate?
Selling to a corporate is not for everyone.
Corporate buyers tend work on the basis of a matrix, or a financial structure and it is the financials that need to add up to buy, or to reach a certain price. They are also detailed in their due diligence, and given they are backed by investors, they tend not to be able to take a commercial view as they expect certain documents, polices and procedures to be in place. They also tend to ask for any premises to be bought up to a level that their surveyor determines. It is also quite rare, but not unheard of, for a corporate to pay the full purchase price at completion – they tend to pay around 70% at completion and 30% over 4 years subject to certain financial targets being reached. But a lot of clients who have sold to a corporate, talk positively about the experience as to how the practice is operated after completion.
Does a seller have to wait for an offer before they appoint a solicitor?
No and indeed, we can help a seller in making sure that they structure the sale in the right way. We act for a number of sellers, who are yet to market, but have already prepared their due diligence, for example.
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