Many dentists aspire to own their own practice. It isn’t of course for everyone, there are risks in being a practice owner, but if run successfully, the rewards can make all the hard work worthwhile.
Buying your first (and in most cases only) practice can appear a pretty daunting venture. You won’t have had to previously consider what is involved, and the number of aspects which need to come together to achieve your goal may seem like too much to contemplate. However, like many things in life, with a degree of determination, and the right sort of advice, you will get there.
There are a lot of things to think about when you start to look for a practice. First of all, and rather obviously, what do you want to buy? Do you want to buy into the practice that you work in at the moment (that may depend upon your principal’s retirement plans)? Alternatively, are you looking to buy a different practice, if so where geographically do you want to work, does a city appeal to you, or does rural life sound more attractive?
You should think about whether you want to acquire an NHS, mixed or private practice. Each type of practice potentially has pros and cons, and depending upon your career and life plans, one of them may appeal more to you than another.
Are you buying alone, or with someone else? We often see dentists who buy along with a friend or colleague, and effectively enter into partnership with them. That doesn’t suit everyone, but it does reduce the capital commitment from each of you. Most important in that context is being certain that you can work together, and that your plans for the future align as much as they can.
We then come on to the question of how are you going to find the right practice. There are a number of ways to do that, including:
- Word of mouth – some practices are sold through a potential buyer hearing about a principal thinking about retirement and approaching them directly
- Adverts – you will occasionally see adverts for practices in publications such as the BDJ
- Sales Agents/Valuers – by far the most common route is through the sales agents who market practices for sale. You should register with each of these agents so that you will be advised of any suitable practices
Taking a step back, you will need to consider how much you wish to pay for a practice. Closely linked to that is how much a bank will lend to you, or what you can afford to pay back to a bank in terms of loan repayments. You may have some savings of your own, which will put you in a better position, or you may have friendly relatives who would be willing to support you by providing some money. Either way, you need to do some sums to make sure that you are able to finance whichever practice you decide to pursue.
Banks are generally very happy to lend to dentists purchasing a practice, provided of course that everything stacks up from the bank’s point of view. There is perhaps slightly more reticence from the banks since the pandemic got in the way of normal life, but lending to dentists is still seen as relatively safe.
Whichever practice you do buy, make sure that you know what you are getting, and that there aren’t any skeletons in the cupboards. When we act for a practice purchaser, we carry out an exercise called diligence. Put simply, it is a process through which we (along with our client) check various aspects of the practice, to satisfy ourselves that there isn’t anything to be concerned about. To an extent, some of those checks will also be necessary to allow the bank to provide finance, and so it is an essential part of the buying process.
Diligence will cover a range of legal topics, as well as financial aspects. Making sure that your advisers are familiar with dental practices is a key here, and so you are best advised to use accountants and lawyers who regularly advise dentists.
Finally, whilst the process of buying a practice shouldn’t be seen as an impossible task, at the same time it is one of the biggest decisions which you will make in your life. It can take time to achieve your aim of becoming a practice owner, but careful planning and preparation, coupled with the right advice, will stand you in good stead for a successful outcome.
