1 Jul 2019  •  Blog, Practice Management  •  4min read

Five things that can go wrong when buying a dental practice and how to overcome them

Buying a dental practice is a pivotal moment in your professional career but it can be overwhelming as well. Dentists can suffer many pitfalls, both during and immediately after the transaction process, so it’s essential to be aware of what could go wrong and how to mitigate the impact.

You end up in a bidding war

Despite fluctuating goodwill values, the dental practice market remains extremely competitive with demand continuing to outstrip supply. It’s all too easy for dentists to become embroiled in a bidding war and end up paying over the odds for a practice. Talk to a specialist finance provider at an early stage before you make any firm plans to enter the market. They can help you to determine what your best options are and how much money you can borrow.

All funders will require a cash deposit from the purchaser. This will vary and depend on each individual’s circumstances and you will need to provide evidence of the availability of your cash contribution.

You don’t have the correct planning permissions

When performing due diligence to review the property information, check that you have the relevant planning permission allowing use of the property as a dental practice. In some instances, this agreement may have expired and you will need to apply for an extension to this planning permission which, even if granted, could delay completion of the purchase by several weeks.

Your practice does not have the necessary CQC registration

When your finance is secured you must ensure that your practice has the necessary CQC registration in place as without it you cannot move towards completing the transaction. Delays can be caused in the event of the CQC registration still being in the name of the outgoing dental practitioner and not the purchaser. In more extreme cases, the CQC can impose financial penalties when a practice is not registered with it at all.

The CQC application process can take a minimum of 10 weeks so ensure your solicitor can assist you to draw up all the necessary contracts and agreements and give yourself plenty of time.

The seller is leaving to join a nearby practice

Patients can react in different ways to learning that the long-time principal dentist they admire is moving on. Patient numbers can be impacted adversely if the departing dentist is leaving to join a nearby practice and will become your new competitor! To avoid any nasty surprises, ask your solicitor to check that the seller will be contracted to the practice for a minimum of six months after the sale to assist in maintaining patient loyalty.

The UDA target is incorrect

If purchasing an NHS practice, carefully inspect the NHS contract to make sure that the Primary Care Trust has not amended the terms and conditions. It could transpire that a few months after purchasing your practice you receive a breach notice from the NHS demanding a clawback due to the seller having underperformed before the sale was completed. If you have concerns about your UDA target, you can ask the seller to give an indemnity which is a promise to reimburse you (the buyer) for any loss for any breach of the NHS contract which occurred prior to completion.

When it comes to buying or selling a dental practice it’s vital that you work with specialist accountants, solicitors and financial providers who intrinsically understand the dental market to ensure the transaction process progresses as smoothly as possible.

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