27 Oct 2021  •  Finance  •  4min read By  • Sarah Barnard

Five steps to buying a dental practice

Practice Plan’s Regional Support Manager, Sarah Barnard, caught up with Wesleyan Bank’s Head of Healthcare, John Clarke, to discuss the key things you need to consider when buying a dental practice…

SB: Hi John, when it comes to buying a practice, what are the main things that a dentist needs to consider?

JC: I would say there are five key things that you need to think about beforehand. Number one is the location, and that ties in with number two which is the type of practice you want to buy. Point three is having the right team of people around you, and then you need to look at writing a full business plan and arranging the funding for the purchase.

SB: When it comes to location and the type of practice, are there any key indicators that a prospective buyer should be looking out for?

JC: If you’re looking at a specific practice then really do your research on the area, consider what the competition is like and also think about the current population of the area. Look into whether there are any planning developments coming up, because if there are, it may lead to a potential increase in your patient numbers.

When it comes to the type of practice you want to buy, the main thing to look at is the income. With NHS practices the UDA contracts are secure, however, as we know they come with a lot of pressure and stress, whereas private practices are really thriving at the moment.

It is also beneficial to look at what skills and expertise the staff at the practice already have. For example, a dentist at the practice you’re looking at may offer different skills and treatments to what you do, so that may allow you to grow the practice by offering a range of different options to patients.

SB: You mention the importance of having the right team around you. What sort of people do dentists need to have in their team?

JC: When buying a practice I’ve always emphasised the importance of having specialists in the market around you, both internally and externally. Internally, look at the staffing that is currently in the practice and consider whether you will need to add to those skills.

There might not be a practice manager in place, so that might be one thing to consider. Another thing to think about is whether the vendor is going to be staying on at the practice, if they are and they’ve built up a good rapport with the current patients, then that could help with a smooth handover.

Externally, the first thing you need to look at is bringing in a specialist accountant and solicitor who have dealt with this type of transaction before. An accountant can really help you put together your business plan, which is next on the list of key things.

Your business plan needs to include things such as cash flow and Profit & Loss forecasts, what the growth opportunities are, and what treatments you are going to offer at the start, and then how you will expand moving forward.

Staffing levels and needs should be included, along with considerations over whether you need all the staff currently at the practice. There may be costs in that area you can take out which would lead to a better bottom-line profit.

SB: And what should the key considerations be when it comes to arranging the funding?

JC: When it comes to the funding having the right lender in place can be crucial to your journey. As with a specialist accountant and solicitor, it is important that you choose a lender who has a full understanding of the dental practice market.

There are a lot of different lenders out there with differing policies and loan to value requirements, and some lenders will consider deferred options which can also be used towards the requirement around loan to value. So, having a lender who knows the market and has a full understanding of your aspirations is key when purchasing a practice.

SB: Thanks very much for your time John!

Get all blogs delivered to your inbox

By subscribing to our blog, you agree to receiving our monthly blog update and newsletter. You can unsubscribe at any time. The security of your personal data is very important to us and we will never sell your data to other companies. You can read more about how we protect your information and your rights by reading our privacy notice.