Practice sales
Martyn Bradshaw of PFM considers the sale and purchase of dental practices from both sides of the fence
Demand is on the increase
W
e have witnessed, over the last couple of years in Scotland, an increase in the number of associates
seeking to buy their own dental practice. This is mirrored by an uplift in corporate activity, although the main corporate players focus on Edinburgh, Glasgow and surrounding areas. This has led to heightened goodwill
values, inevitably with demand often outstripping supply.
I am thinking of selling – what should I do? If you are looking to sell your dental practice in the next 12 to 24 months, you should focus on making your practice as presentable to prospective purchasers as possible. A key part of this is the financial profile of your practice, which needs to ‘stack up’ from the buyer’s perspective, not least to impress their bank. The most important thing that a buyer (and banks) will examine is the profitability of the business pre-sale (your accounting and financial history) and how this might change under their ownership. When presenting the practice ‘finan-
cials’, adjustments to your accounts are advisable to take account of items personal to you. A spouse’s salary, for example, can be ‘added back’ to show a more realistic picture of expenditure. We would often expect a new purchaser to work full time at the practice and therefore if you currently work less, with the help of an associate or locum, this should be demonstrated through projected accounts. Marketing your practice to the widest audience offers the greatest chance of maximising the sale proceeds and getting the contractual terms you want. In many cases, the highest offer isn’t always the best offer. This is especially so where your prospective buyer is a corporate body as they are likely to impose more rigid terms than a private buyer.
A good dental practice sales agency
will have a list of pre-registered dentists who are looking for dental practices by geographic area. The agent should prepare a professional prospectus including a valuation. Setting the right sale price is key and a profes- sional valuer will offer guidance on this, drawing on their local experi- ence and knowledge of previously achieved sale prices. With the prospectus issued, viewings are made, offers and terms are negotiated. Going it alone will restrict the audience
to which your practice is marketed and be problematic especially at the negotiation stage. Keeping negotiations with prospec- tive buyers at arms length allows you to continue to practice without distraction. ‘Best and final’ offers are often required, a process which is fraught with problems unless handled professionally. A practice sales agent should research
prospective buyers on your behalf, espe- cially where bank finance is required. This
prevents time and effort on negotiations which might ultimately fail because a buyer does not have the means to follow the purchase through.
I am a buyer – what should I do? Buyers are required to be more proactive and quicker off the mark than ever before. We often take calls from interested parties enquiring about practices that have been sold before they have the chance to view. If you are interested in buying a dental
practice then register with a sales agency. Good independent agencies should not make any charge for this and will ensure that you receive the details of practices as they come on the market in your area. Due to the speed at which some practices sell, it is advisable to make a viewing appoint- ment as quickly as possible and make an offer with out delay. To move swiftly you will need to ensure
ABOUT THE AUTHOR
Martyn Bradshaw is a director of PFM, one of the leading UK dental practice sales agents. For a listing of practices for sale in Scotland, to register as a buyer or for practice finance, please visit
www.pfmdental.co.uk If you would like to contact Martyn, please email
martyn.bradshaw@
pfmdental.co.uk or phone on 01904 670 820.
that finance can be arranged. This can be approved relatively quickly through specialist healthcare lenders, although do take care to present your case thoroughly as unsecured lending can be very chal- lenging to arrange. Again, using a broker to support your application will reap rewards. Access to European Investment Bank (EIB) funding and the Government’s Enterprise Fund Guarantee scheme (EFG) should be considered by a good broker. Using a broker should cost the buyer no more than a direct application and is far more likely to secure you the best interest rate and terms.
Scottish Dental magazine 79
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