Acquiring an existing dental practice is a significant investment, with the potential to bring you plentiful returns for the foreseeable future. However, it’s also a complex and weighty undertaking, with a great deal of responsibility involved.
After all, once you’re the owner, you’ll be providing an essential healthcare service, so you need to make sure you can guarantee high clinical standards once you take over, not only for your patients but your employees as well.
Taking over and running a busy dental practice means being able to navigate the clinical landscape, manage a skilled team, ensure compliance – both medical and legal – and oversee all the usual aspects of running a business.
If you feel you’re in the right position to take on such a responsibility, then read on for our concise but insightful guide to buying a dental practice, packed with top tips and friendly advice!
Pros and cons of buying a dental practice
First, let’s examine the advantages and disadvantages of investing in an existing dental practice, so you will have a firmer grasp of what to expect, should you go ahead with a purchase.
Benefits
The main benefit of buying a dental business is, quite simply, that you will become the owner of your very own practice! As a result, you will then assume total control over it and its facilities, equipment and staff, rather than being hired to work at someone else’s practice where they call the shots about how everything is managed.
Although buying and taking on the extensive responsibility of owning a dental practice can seem daunting and is bound to come with various challenges, in the long run being the head of your own business is sure to bring you both career satisfaction and financial rewards.
Disadvantages
There are several potentially significant downsides to buying your own business, although they can be overcome with time, effort and patience.
The first disadvantage is the fact that you’ll have to pay a substantial amount of money to buy an existing business. While you don’t have to pay everything up front, as you can finance the purchase via a loan, you will still have to pay various fees associated with buying a business. These include hiring legal and financial experts to assist, paying for property surveys, and ensuring regulatory compliance.
It may also be a challenge to find a practice that suits your unique requirements, be that a specific price, location, or specialisation. The market can be very competitive, especially in sought-after urban locations, so the hunt for the perfect business for sale could be lengthier than you initially hoped.
The good news is that you can hire a business broker to help you in your search. Business brokers like Harris Acquire have access to an extensive nationwide network of contacts spanning a wide range of industries. As a result, they can prove invaluable when it comes to locating and verifying the suitability of different dental practices available for sale.
What’s more, they can value each target for you and assist with every stage of the acquisition process.
Special considerations
Because a dental practice is a medical business, there are several special considerations to make as you approach the role of owner.
These include:
- Your own expertise. It’s crucial that you have enough experience, not just as a dental professional but in terms of managing a clinical team and having a good ‘business head’ on your shoulders. You should also have a healthy financial history of your own; if you don’t, then try to address any factors that may lower your credit score before you apply for financing.
- CQC registration. You will need to apply for CQC registration when you become the owner of your own dental practice as, without their approval, your business won’t be able to operate.
- The right practice. There are several different kinds of dental practice to consider, each with their own unique qualities, pros and cons. These range from NHS practices to private clinics and practices that offer a blend of the two. Depending on your current career status, your goals for the future, and your risk profile, one type of practice may be more suitable than the others.
By taking these crucial considerations into account, you give yourself the best chance of making your dental practice purchase a success.
How to purchase a dental practice
If you’ve weighed up all your options and you feel that you are in the right place in your career – and your finances – to buy your own business, then it’s time to consider the actual acquisition process. Shall we begin?
1. Finding the ideal practice
As we’ve already mentioned, finding a practice that matches your requirements can be problematic, especially if you’re searching for a business in a sought-after urban location like London.
If you do find a suitable option, it’s also likely to be more expensive than other practices in other parts of the country. As a result, compromise may be necessary in terms of location or how much you’re willing to pay.
Finding the prospect of uncovering the ‘right match’ a little daunting? Never fear. A tried-and-trusted business broker like Harris Acquire can help you locate suitable candidates for you to consider. What’s more, they can handle everything else, from making the initial contact and valuing the business to assisting with negotiations and the all-important due diligence process.
When it comes to valuations, you should keep in mind that the main factors used to value dental practices include their reputation and the size of their customer base (known as a ‘goodwill’ percentage), its UDA rate (if it’s an NHS practice), its EBITDA, and whether any upgrades are required in terms of equipment and the condition of the property.
2. Negotiating the terms of the deal
Once you or your business broker has found a suitable target for you to buy, it’s time to move onto negotiations.
During this stage of the M&A process, you and the practice seller will hash out the proposed terms of the deal. These terms will include the selling price and payment structure, the current owner’s exit strategy, and whether approval by the CQC will be necessary before the deal is completed.
By creating an initial agreement this way, you and your seller ensure you each have a firm grasp on how the transaction will work, and the roles you will both play in ensuring the success of the deal for everyone concerned.
3. Due diligence
Before your legal team can draft the final legally binding contract, it’s time for that all-important due diligence phase of the proceedings.
With the assistance of your broker and legal and financial experts, you can go through the practice’s paperwork with a fine-tooth comb and make sure everything is order. Being able to have this insider access to the practice’s operations will help you make an informed decision about its genuine suitability. It also gives you the opportunity to uncover any hidden issues which could be a deal-breaker, such as a medical dispute, any problems with the property, a discrepancy in the numbers, or problems with staff contracts – to name just a few examples.
If anything you discover does ring some alarm bells, you can opt to negotiate for a lower price – or you can walk away from the deal and search for a more feasible option.
4. Sealing the deal
Hopefully the due diligence process will not reveal anything too untoward, and you and your seller can begin finalising the deal. During this stage, you should focus on applying to the CQC, sorting out your payment plan with your lender, and instructing your legal team to carry out some final checks and begin drafting the contracts.
When all the legal and financial boxes have been ticked, it will then be time to sign on the dotted line at last – and take ownership of your very own dental practice! Congratulations!
Why you should use a business broker
You can probably see by now that buying an existing dental practice can be a rather complex and potentially intimidating undertaking. As we’ve described above, having a reliable and experienced broker by your side to oversee every stage of the transaction can take a lot of the weight off your shoulders and really streamline the process.
However, a business broker can also bring other benefits too, such as offering tips and insights that you may not have considered. For example, they can advise you on crucial KPIs to be aware of that will reveal whether a practice is flourishing or struggling. They can also offer invaluable advice on how to handle things post-sale; for example, how to ensure a smooth transition for your newly acquired staff and how to come up with an eye-catching marketing strategy to bring in new patients.
Most importantly, they can instruct you on the crucial ‘do’s and don’ts’ of the acquisition process – such as the importance of paying the right price, mishandling the CQC registration process, and not skimping on due diligence.
In a nutshell, having their seasoned advice available throughout the transaction can save you a lot of time, money and hassle.
Harris Acquire at your service
Now that we’ve reached the end of our guide to buying a dental practice, if you’re keen to go ahead and take ownership of your very own clinic, why not give us a call?
We’re currently offering an exclusive Acquisition Finder service which includes a 30-day money-back guarantee, so it’s the perfect time to start searching for a dental practice to buy! What’s more, our tried-and-trusted team will oversee the process every step of the way, ensuring an optimal acquisition experience with minimal fuss.
To find out more about how we can help you, give us a ring on 01926 757100 or send an email to Hello@harrisacquire.com and we’ll be in touch right away!
