10 top tips for your dental practice search
Finding a dental practice requires strategic thinking and attention to detail, writes Samantha Hodgson
Purchasing a dental practice is a significant decision that involves careful consideration and thorough planning. Finding a dental practice requires strategic thinking and attention to detail. To help guide you through this important milestone, here are 10 top tips to keep in mind when buying a dental practice.
1. Define your goals and criteria
Before diving into the market, take time to consider your goals. Consider the type of practice you want to own; location, the type of income you want and may be hoping to grow, number of surgeries, and whether you plan to work there yourself or not. Having a clear vision will help you narrow down your options and make more informed decisions.
2. Register with all agents
Make sure to register with every agent covering Scotland to not miss out on practices coming to market.
3. Check how the practice is valued
The practice could be valued under an associate-led or principal-led model. Make sure that you understand the difference between each model and know which model the practice has been valued on. If you are looking to buy a practice to run associate-led, it is unlikely that a practice valued using the principal-led model will be financially viable for you.
4. Make the most of your viewing
The viewing is your chance to get information directly from the owner that is unlikely to be included in the sales prospectus. Ask about the type of patients, local area, practice dynamics, staffing team and seller’s plans for the future. Don’t forget to also tell the seller a little about you and your plans for the practice going-forward – they may have multiple buyers to choose from and some sellers choose the individual they feel best suits the practice, patients and staff.
5. Consider investment costs
Does the practice need immediate financial investment? Does the practice need new equipment immediately to complete the type of work you intend to introduce? Assess the need for upgrades or replacements and factor these costs into your overall budget.
6. Consider a buyer’s assessment
If you are unsure on the asking price or need some guidance before placing an offer, you should consider instructing a buyer’s assessment. The cost of a buyer’s assessment is often a fraction of a bank instructed valuation price and could therefore save you thousands should the assessment highlight areas you are not happy with.
7. Personal projections
A valuation shows the gross profit a practice can make, but it does not show your personal take home pay. You will need to factor in tax and loan repayments (if applicable) to see what income you will actually have to live off. Often this is done by a dental specialist accountant.
8. Speak to a broker
While a broker cannot guarantee what you can borrow, as this depends on the profitability of the practice you are buying, it is worth speaking with a broker ahead of a practice sale to get your finances in order ready to approach lenders. A specialist healthcare broker can give you an update on current lending terms and requirements and advise on cash deposit levels based on what type of practice you prefer. It is also worth understanding the types of loans available and any costs involved in arranging bank finance (PFM Dental do not charge a broker fee when acting as sole broker).
9. Consider purchasing costs
Fees to buy a dental practice have, like most things, increased over the last couple of years. You will usually need cash reserves for the following: solicitor fees, deposit, bank valuation, insurances and stock at completion.
If you are buying through a limited company, you may have additional requirements such as bank separate representation solicitors and personal guarantee legal fees. Estimated buying costs are typically in the region of £15,000-£20,000 (not including your deposit against the purchase price).
10. Put forward a strong offer
Offer what you are willing to pay for the practice at completion – unwarranted adjustments to your offer during the legal work could lead to the sale falling through, resulting in lost time and fees for both parties. Give detail in your offer – what are your plans for the practice, do you want the seller to stay on, what are your timescales. Have finance in progress – the agent will need to confirm to the seller that they have reviewed your financial position, or received a copy of your agreement in principle from a lender, before your offer can be formally accepted.
11. Conclusion
Buying a dental practice is a complex process that requires careful planning and attention to detail. By following these 10 top tips, you can strengthen your dental practice search and increase your chances of a successful purchase. Remember that each practice and buyer is unique, so tailor these tips to fit your specific circumstances and goals. With thorough preparation and the right guidance, acquiring a dental practice can be a rewarding step in your professional journey.
Author
Samantha is a dental practice valuer, finance broker and practice sales agent. With a decade in dental practice sales, Samantha understands all the ins and outs of the sale process. Her days are spent valuing dental practices for vendors and buyers alike, negotiating the best sale terms for sellers and buyers, and arranging practice purchase finance for buyers. PFM Dental is one of the leading sales agencies in Scotland.
To find out more and get personalised advice, visit pfmdental.co.uk
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