Tips when selling your practice
Puja Solanki from law firm Hempsons offers some tips to help your practice sales proceed smoothly
Irrespective of whether you are buying or selling a dental practice, you need to prepare in advance and make sure that you are fully geared up for the transaction.
In this article, we look at selling your practice. Here are some tips to help you get started.
1. Appoint advisors early
Your advisors should be experts in the dental field who are familiar with dental transactions. There are complex issues in a dental transaction, not least the transfer of any NHS contract and CQC registration. Non-specialist or inexperienced solicitors or accountants may cost less in the beginning but could end up costing more later down the line, when issues crop up that are not properly resolved.
Even if you have a private sale, make sure you obtain an independent valuation so you know how much your practice is worth. Choosing a specialist dental agent to value your practice will ensure that you have a fair idea of how much to sell for.
3. Due diligence
A properly advised buyer will undertake a thorough and extensive due diligence exercise. As soon as you accept an offer, it is a good idea to start collating some standard information in a ring binder which a prudent buyer will request. This can include employment contracts, associate agreements, hire-purchase agreements, leases, X-ray certificates, copy of NHS contract, pay and activity statements, EPC, asbestos report, waste contracts, practice insurance etc. A specialist dental solicitor can assist you in collating the key information and advise you on the best way to present this to the buyer, and what liabilities or further considerations may arise from the information you are providing.
It is always advisable to ensure that you collate due diligence documentation and respond to the buyer’s due diligence enquires as thoroughly and quickly as you can, in order to ensure as smooth a sale a possible. The buyer wants to be assured that they are going into the purchase with their eyes open, and this means that they will want to see everything to do with
4. CQC registration
You will already be registered with the CQC and the buyer will want to see evidence of your registration. Recent NHS England policy has suggested that the Local Area Team will request sight of a partnership CQC registration before agreeing to a variation of any NHS contract. While it is questionable as to whether this is correct procedure under the Regulations, as they do not provide for this as a contract variation requirement, in order to move forward with the sale it will be necessary for you to apply to the CQC with the buyer under a joint partnership application.
In order to submit such an application, you and the buyer must have an up-to-date DBS check (which has been counter-signed by the CQC). This can take around four to six weeks to obtain. It will then take the CQC between eight and ten weeks to process your application. It is therefore essential that you factor these timescales into your sale.
It is also in your interest to ensure that you cease having any obligations to the CQC once your practice is sold. Therefore ensuring the CQC steps are complied with is for your benefit as well as the buyer’s.
5. NHS contract
If your practice has an NHS contract, make sure your house is in order by ensuring that any previous underperformances of UDAs or UOAs have been dealt with and if NHS England is conducting a clawback, supply documentary evidence that the liability is being discharged in full by you (whether by monthly deductions from your BSA statement or in a lump sum).
The sale of the practice will include either the sale of a freehold, grant of a new lease or assignment of a current lease. A buyer will most likely require funding from a lender to acquire the practice and most lenders will only lend on the basis of a lease of more than 10 years. Make sure your lease is in a ‘saleable’ condition. Any freehold sale will require a commercial valuation of the property.
Where third party landlords are involved, you may need to factor additional time and costs into the transaction.
Check that you have approved use of the premises as a dental surgery (from the title deeds and the planning authority). If you have a mortgage, make sure there are no restrictions/penalties on redemption or granting a lease.
The property arrangements will usually be the most complicated aspect of the transaction and it is important to know the options available at the start.
7. Plan in advance
A standard dental transaction could take between three to six months (potentially longer if negotiations are protracted, and then having to factor in transfer of the NHS Contract and CQC registration and third party negotiations), so start your sale/retirement planning early. It is always better to have a conservative timetable so that both parties’ expectations are managed and everyone can plan for the future accordingly.
8. Your future plans
Whilst you may be selling your practice, and may not want to practise dentistry again, this may not be case for everyone. If you wish to stay on at the practice after completion as an associate, make sure that this is a term of your offer, and that the buyer is happy to retain you after completion. Ensure that you put in place an associate agreement.