The ins-and-outs of the sales process
Selling a dental practice can be a stressful experience, with all sorts of obstacles along the way. With the right advisers and support though, it needn’t be that way – get the following in place to ensure a successful outcome for your dental sale.
Ask yourself if you know the true value of your dental practice? Unless any business or property has been properly exposed to the market, it’s impossible to know what its true value is. There are sometimes reasons why it suits a practice owner’s purpose not to go to the market – loyalty to a long standing associate is a common one – but generally speaking, in today’s market, where demand exceeds supply, the best way to maximise terms is to have a competitive sale process.
We’re often asked, especially by private dentists, whether it will be necessary to ‘tie-in’ for a period after completion. The general answer is yes, as the transition of patient relationships is a very sensitive area for a buyer and also the lending bank. It also often suits the outgoing principal’s circumstances to continue working, often on the income you are generating working as a principal. The more it is, the higher the risk for a buyer and the longer you are likely to be asked to tie-in for.
It is also common in the sale of private dental practices for a percentage of the sale price to be deferred, sometimes over a number of years and sometimes linked to the performance of the practice or retained principal. Negotiating such terms is a highly sensitive and specialist area, and experience has taught us that the devil is in the detail. Always make sure that you work with a suitably experienced and qualified selling agent who has your interests at heart.
There are various ‘buyer types’ in the current market, each of which has its strengths and weaknesses to consider when selling. Corporate buyers won’t have to go to a bank for funding, so it is effectively a ‘cash’ offer, whilst you might decide that independent multiple owners give you more clinical flexibility and a different culture. If you’re being retained post sale, the profile of purchaser will probably be a really important consideration and something that you should discuss with your agent before your practice is offered for sale.
Due diligence is the collective term given to the information required by the purchaser to successfully complete an acquisition. It can be a very daunting part of the process as the amount of information required is huge and the questionnaires run to many pages. The importance of going to market with a quality ‘information memorandum’ cannot be overstated; it presents the market with the message that not only is your business organised, but that you are a serious seller. The difference between good and bad information can be thousands of pounds in value and months in time. It’s good to work through with your chosen agent at the earliest stage so that you are clear what the buyer will require at all stages.
Buyers remain acquisitive with NHS practices being of particular interest. This has resulted in some significant sales being achieved and positive price movement of larger and quality practices in particular.
To discuss how Christie & Co might help you achieve your future plans please visit www.christie.com.