The global pandemic has caused chaos in every industry, and the purchase of dental practices is no exception.
Research has shown that the average time between a buyer making an offer, and the completion of the purchase of a dental practice has increased. In many cases this is due to circumstances which are beyond the control of the lawyers, and also both parties involved in the transaction.
Some of the most common factors are as follows:
Registration with CQC
The registration process with CQC is an essential step in the process and would normally take approximately eight weeks. However, processing times have lengthened, and registration applications are now taking up to 16 weeks to receive approval. This is in addition to any DBS checks required.
The obvious solution may seem to be to simply submit the registration request earlier in the process. However, if it is submitted too early, a second application may be required, extending the CQC registration process even more. This is because pending applications are rarely kept on file by CQC assessors, so submitting it too soon is a waste of time.
It is a good idea to get your CQC in at the first appropriate point, which is neither too early nor too late. The legal representatives for both the buyer and seller can help to set the timescales for the submission of an application when planning the transaction.
COVID-19 has meant that there are a number of delays in the funding process, with particular sticking points noted at:
• Getting a valuation,
• Security documents being sent out for signature,
• Searches being carried out (delays of up to 12 weeks have been observed).
Banks are focusing their efforts on supporting government initiatives for businesses during the pandemic, with fewer resources available to process other types of transactions. The physical absence of the underwriting team in the office is also having a marked impact.
Your solicitor and finance broker/bank manager should begin communicating as early in the process as possible to determine what documents will be required by the lender.
If the property involved in the transaction is being leased, there are several possible actions:
• The landlord sells their interest to the new buyer,
• The lease is terminated,
• The lease is assigned.
All of these require co-operation from the landlord. The sale of the business can proceed concurrently, but if the landlord is slow to respond, there is no way to avoid delays.
It can be helpful to agree a timeframe with the landlord at the start of the process so that everyone knows what to expect.
If funding is required to cover the landlords’ expenses, it is a good idea to make sure these are provided to the solicitor as early as possible to prevent delays at a later stage.
Planning and Communication are Key
As can be seen from the above, there are many points at which the process can get delayed. The key to minimising these delays is communicating with all parties and forward planning. By making sure everyone understands what is needed, and ensuring timeframes are agreed in advance, it should be possible to reduce the impact of COVID-19 as much as possible.