Many dentists aspire to be their own boss and to become a practice principal. That might involve entering into partnership with other dentists, either in the practice that they work as an associate or in a new practice. However, in many cases they look to acquire a practice and become a sole principal, which allows them to run the business without having other co-owners to consult on business decisions.
Going down this route isn’t for everyone, but for those who choose to take the purchase path, it is useful to plan ahead and to be clear on what steps are required to reach the promised land of practice ownership.
Finding the Practice
Once you know what type of practice you want to buy (NHS, private or mixed) and have a geographical location in mind, you can start your search. Some find a practice through word of mouth and professional connections, but most common is to find a practice being marketed by one of the dental agents. We would tend to recommend that you register as a potential purchaser with all of the agents, so that they will let you know if a suitable practice comes to the market.
You should also think about whether you want a practice with a property which is owned (in which case the total value will be higher) or leased.
Getting into Pole Position
Finding a suitable practice is the first step, having an offer accepted is another. In recent years, in particular, competition for practices has been significant. This has even led to some practices being sold via a closing date, similar to when some houses are sold. That, and the presence of corporates keen to buy increasing numbers of practices, has certainly had an upwards impact on goodwill prices, which isn’t helpful to potential buyers. However, there are individual buyers who are successful, so don’t be put off by that.
Funding
Once you have found the ideal practice, the next step is to secure the necessary funds to achieve your dream. You should ideally have looked at finance, in principle, prior to your practice search so that you can have some confidence that the money will be available.
You may be lucky enough to have some capital behind you by way of savings, or perhaps another source of finance, such as from family members. If so, that is great, and will certainly help. Most purchasers need to look to banks for purchase finance. The Thorntons Dental Team has contacts with all of the healthcare teams within the banks and are happy to make introductions where required. Alternatively some use finance brokers who can search for suitable finance for any given purchaser.
Banks continue to be keen to fund the right practice and the right purchaser, and so hopefully you should be able to secure the necessary funds.
Getting the right advice
Once you have the practice and the finance, you can start to progress the purchase along with your professional advisers. The timescale from start to finish will vary from one practice to another, but in most cases it will take 3 or 4 months to reach the completion date. There are a number of legal and other steps in this process, a subject in its own right, and one which we will cover in future articles.
One very important point is that you will need accountancy and legal advice on the acquisition, and ideally you will consult advisers who have experience in buying dental practices. That should make the deal as smooth as it can be.
Achieving your dream
Having gone through all of these essential steps, you should at the end of the road reach the stage where completion can take place and you can start to run your own practice, making your own decisions and benefitting from the value which the practice as a whole generates.
The effort involved in buying a practice shouldn’t be underestimated, but with the right advice and good preparation, it should be possible to achieve your dream of becoming your own boss, and taking the first steps on your journey as a practice principal.
Insight from Michael Royden, Corporate Solicitor and specialist Dental advisor at Thorntons. For more information contact Michael on 03330 430350 or email mroyden@thorntons-law.co.uk.
