Michael Royden explores the ins and outs of selling your dental practice – here’s everything you should know before a sale.
Dental principals often build up their practices over decades, but for everyone there comes a point when they wish to retire and hand the practice on to a new owner. This can feel like a daunting prospect, but with the right professional advice the process of selling shouldn’t be seen as an ordeal. At Thorntons, our dental team regularly advise dentists looking to sell, and we can keep you right on each of the steps to sale.
Finding the right buyer
An obvious point, but you need to find a buyer. This can sometimes be an associate in the practice, but often a buyer is found for you by a sales agent who would market your practice for sale and negotiate the best possible sale price and other terms for you.
What are you selling?
This may seem an odd question, but if you operate the practice as a limited company, you can either sell the goodwill and assets, or sell the company itself. The two routes will generally bring very different tax consequences for you as seller, and so we recommend seeking advice on that from your accountant at the outset. This is sometimes an issue which is overlooked at the start of the sale process, and can cause considerable difficulties further down the line.
Heads of terms
Once a sale has been agreed in principle, sometimes a document known as heads of terms would be negotiated. This covers key terms of the sale, such as the price, a target completion date, whether the seller is staying on to work for the buyer for a period, and so on. This is a useful document in that it helps to flush out any differences of opinion between the buyer and the seller at an early stage.
Diligence
All buyers (and their lawyers) will ask a variety of questions about the practice, this is known as due diligence. All of these questions relate to your practice, and should be simple enough to answer. Just be aware that you will need to carry out a diligence exercise as part of the sale, and getting your practice documentation in order ahead of the sale may be time well spent. Examples would be ensuring that you have suitable employment and associate contracts, practice policies, etc.
Sale and purchase agreement
One of the final legal aspects of selling a practice is the negotiation of a sale and purchase agreement. This is the full contract which sets out the terms upon which you are selling the practice to the buyer. It can be a fairly lengthy and complex document, however don’t despair, a dental specialist lawyer will be able to keep you right on the terms of the document, and to negotiate on your behalf so that the Agreement is suitable from your perspective.
All of the members of the Thorntons dental team spend the bulk of their working week acting for sellers of practices, and we would be delighted to hear from anyone looking for advice on where to start with their practice sale. Contact us on 03330 430350.
This article is sponsored by Thorntons.
