The practice purchase checklist
John Grant, joint founding director at Goodman Grant, sets out the most important considerations when purchasing a new dental practice…
Buying a dental practice is no mean feat. It can be a complicated and often stressful process and there are many important steps that any purchaser must take to ensure the investment is viable – in both the short and long term. As such, here are some of the most crucial considerations that you, as the purchaser, should take into account.
Due diligence is all about finding out as much information about your new practice as possible. It is undoubtedly one of the most vital steps since it will help you identify any potential problems early on and give you the time to decide how best to deal with them before you have made ay legal commitment to the purchase. Legal due diligence can be a lengthy process, carried out by a lawyer on your behalf, and is typically split into two different sections: property due diligence and dental due diligence.
As far as the property is concerned, it is crucial to employ a surveyor to check whether the property is structurally sound. A number of searches (questionnaires sent to various statutory authorities, such as the local authority and environment agency) will then be undertaken.
Your lawyers should also check whether there are any restrictive covenants in place on the premises, to ensure you are fully permitted to practise there. Importantly, if the property you are purchasing has not been used a dental practice previously, restrictive covenants are far more likely to be a factor. If this is the case, you must be diligent and investigate any prohibitions that are in force on the premises before taking the process any further. It is possible to release restrictive covenants in some cases, or to make variations that will allow you to conduct your dental business in a beneficial manner – but if this is not an option, it would be wise to reconsider the acquisition. After all, if you proceed and break the covenant in the future, you will likely face an injunction or fine.
If the premises has not been a dental practice in the past, it will be necessary for you to apply for planning permission to practise there. Even if you are purchasing an established practice it may be worth your while to check the permissions anyway – it is not that uncommon to find that planning permission was never obtained and, while this rarely results in a purchase falling through, it is an issue that must be addressed.
It will also be necessary to arrange dental-specific due diligence, to determine the state of the business you are purchasing – from the practice’s goodwill, to the number of employees and associates on the books, and whether they have thorough agreements in place. You will also want to check any equipment logs and maintenance certificates, to ensure everything is in good working order. Ultimately, due diligence will tell you whether the investment you are making is worthwhile and sustainable for the future.
Finance for your venture must, of course, be approved beforehand – and it is important that you have allocated enough time to complete everything properly. Some banks can be quite pedantic when it comes to conducting their own checks and valuations – something that might delay proceedings for some time. Be sure to secure this funding early on and provide the bank with as much information they require – and promptly. It may also be the case that your lawyers will require a ‘safe to lent’ confirmation from the bank – basically ensuring that the mortgage advance will be available when requested, before being legally committed to the purchase.
CQC is a legal requirement for any dental practitioner and it is absolutely crucial that you make your application on time. In most cases, this will also include a DBS check, though this is usually made through the CQC itself.
Starting your CQC application at the right time is crucial. Too early, and the CQC will simply reject you; too late and you will not be able to complete the purchase on time. The window of opportunity that you have is very specific and there are many reasons why an application might be rejected – so it is always worth seeking advice at this stage. Most applications will take about 14 weeks overall, but some may take considerably longer.
Being realistic is, perhaps, the best way of keeping your stress levels down during a practice purchase. You must be prepared for the process to take a long time – and there is a risk of unforeseen delays. Having realistic expectations and realising that a great deal of the process is out of your hands will help you stay positive throughout the process.
It is also important to employ the services of a dental specific solicitor if you want to complete with as few issues as possible. The team at Goodman Grant Solicitors are a good example; with years of experience in the field, they have the expertise and the know-how to offer consistent support and unrivalled advice.