Thinking of buying your own dental practice? Here’s what you need to know
Mike Bryan lists the things you need to consider when buying a practice, from an accountant’s perspective.
Searching the market
There are multiple sales agents working with dentists. Each practice on their ‘books’ will have a sales prospectus; a summary of the headline information regarding the practice. For instance:
- NHS versus private
- Surgeries and perhaps equipment age
- Freehold or leasehold
- Profitability (and adjusted profitability)
- Staff hours
You should already have an idea of what you are looking for in any potential practice. A key thing when looking is to observe where you can add value to a particular practice. What can you do to make the practice better, more profitable and ultimately add capital value. The aim is so that you can sell it for more than you paid in years to come.
Your accountant should be happy to read the prospectus and to provide a brief commentary. This should highlight the financial aspects, arming you with pertinent questions to ask when viewing the practice.
Making an offer?
As accountants, we are regularly asked what the practice is ‘worth’. Ultimately a business is only worth what a buyer is willing to pay for it.
Sales agents are generally paid by the seller, and therefore have their best interests at heart. They work for them.
Banks will value the business, and this is generally at a fair value. The bank does this once lending is offered in principle and therefore after the negotiation process. A bank will not offer any assistance with negotiation.
Finance brokers will…