Buying your first dental practice will be one of the highlights of your entire career.
Taking this exciting step and venturing out on your own, gives you complete control of how your practice operates and the direction it takes. It will allow you to place your priorities front and centre, and to build something you can be proud of.
Of course, it can also be daunting. Leaving the comfort and support of a management team to strike out alone puts all the responsibility on you and that can be a scary thought.
At ASPD, we appreciate that even knowing where to start can seem overwhelming. That’s why we’ve put together this post, to offer some guidance on how to go about buying first dental practices.
We’ll consider how to find the right practice, how to secure a dental practice mortgage and at what point you should consider looking for specialist support or legal advice.
Is Dental Practice Ownership Right for You?
Before investing the large amounts of time and money necessary when buying your first dental practice, make sure you’re prepared for the realities of being an owner. It can be tough, comes with a lot of stress and is not suited to everyone.
Speak to friends, peers and ask other principals who already own practices for advice. Ask about the purchasing process and the difficulties they faced. Particularly ask about how their roles (and lives) changed when they became owners.
Purchasing your first practice will be the biggest commitment of your career so far, however, the more research you do, the more prepared you will be and the smarter decisions you will make throughout the whole process. So, take your time, and do it right.
Before you start, be as certain as you can that this is the right step for you. This way any struggles that you face on the way will ultimately feel worth it.
Step one: Find the perfect practice
Starting a new dental practice from scratch may feel intimidating, but it could be the right option for you.
It gives you the chance to build the business from the ground up. You will be able to foreground your own interests with it and choose the direction it takes from the very beginning.
This prospect will appeal to many people. But, be warned that it will take a lot of planning and preparation, plus confidence in both yourself and your vision for the practice. Consider whether this will be a solo venture, or if you will look for partners as you move forward. Then, start listing what you want in a premises and putting together a solid business plan. Speak to financial professionals as early as is practical, and make sure all your potential plans are viable.
Buying a working practice may seem like an easier option. The pre-existing patient base will be reassuring, plus the history of accounts and records may help persuade potential investors of the validity of the business.
But ‘easier’ doesn’t mean it will be a walk in the park. There is still an awful lot of work to be done in finding a practice that will work for you.
When conducting your search for a practice, there are many things you need to consider. When convincing lenders or investors, you need to be knowledgeable and secure about these factors so that you can answer any tricky questions:
Obvious as this sounds, it is imperative you don’t overreach your finances. Make sure to factor any renovations, work or mandatory initial spending into your budget. A specialist dental account can help you consider your current standing at this stage.
Both in relation to your own requirements and to how it affects the footfall. Look at the socioeconomic background of the any areas that you consider. This will have a big impact on what treatments your eventual patients will be looking to receive.
You may struggle to secure financial support for a business with a hefty NHS list, if your work history is based in private practice.
Freehold vs Leasehold
There are advantages and disadvantages to either option so look into both. You may find flexibility in your situation, but both can involve tight restrictions that will interest or concern any lenders you approach.
Only when all these points are addressed, will you be ready to start your search for a practice.
Start by contacting sales agents who focus on dental practice sales to minimise time wastage in your search. This will also give you peace of mind that any advice you take is informed and reliable.
Step two: Do due diligence
Once you think you’ve found a great potential practice, then the hard work really begins. Though due diligence is technically the responsibility of the seller, you should still go through their paperwork with a high level of attention. Check their figures, projections and intentions; are they promising benefits that may never appear?
You may also wish to seek support in evaluating the business finances from specialist accountants. Alternatively, speak to a specialist dental lawyer who can assess the existing business and the validity of any plans for growth.
You can even get the business valued yourself by a reputable company. This can help to give you leverage when you’re negotiating a price.
At this stage you should also start on your Care and Quality Commission registration application. When you are making an application to the CQC for the first time, the registration process can last between 10 and 12 weeks. This is quite a lengthy wait, and it pays to get it underway as soon as it is feasible. If you are unfamiliar with the registration process, you can again speak to a solicitor who specialises in the dental industry, or a dental compliance consultant.
Step three: Get your finances in order and secure a mortgage
If you haven’t already, then this point is where you definitely need to start seeking guidance from other professions. When buying your first practice we suggest you find people with extensive experience in the dental industry, from solicitors to mortgage advisors and sales agents.
The hardest part of the purchase can be persuading a lender to support the transaction. It is customary to have at least a 10% deposit, though this can be influenced by many factors. Employing a broker who knows the dental industry to contact the banks on your behalf will help to ensure you get the best deal possible to match your needs.
At this point, you should be ready to put in an offer. As with buying any property, this is the key point in the process. Make sure you are suggesting a price that is reasonable and in line with the assessments you have made during due diligence.
You can also try non-financial incentives to help get your offer accepted. Most sellers will have an interest in securing their legacy. Let them know that their business will be passing into the hands of someone who is keen to uphold their high standards, and maintain their reputation. This kind of promise could be the detail that makes sure your offer is the one they choose.
Step four: Seek legal advice
As with all property and business purchases, you will be expected to instruct a legal professional to oversee the transaction. As with financial advisers and sales agents, it is best to use a trained solicitor who specialises in dental practice purchases.
An experienced and qualified solicitor will be able to support due diligence and the purchase paperwork. They will also be able to advise on any specialised clauses in the contracts. When it comes to NHS practices and meeting the needs of the CQC, this input can prove invaluable.
When all these steps are completed, you will be well on your way to buying your first dental practice. This should be an exciting time for you and a landmark moment in your career.
Make the process as straightforward and stress-free as possible by surrounding yourself with experienced professionals who specialise in this area. That way, you can feel comfortable and confident that every important decision you make is informed, considered and – ultimately – correct!