Considering purchasing a practice? Becoming a principal is both a daunting and alluring prospect that most dentists will consider at some point in their career.
In this article, Lis Hughes, Managing Director at Frank Taylor & Associates, discusses the key points to consider before ‘taking the plunge’.
Frank Taylor & Associates
ARE YOU READY TO TAKE THE PLUNGE?
Owning your own practice is seen by many as a natural career progression and it can be rewarding both financially and professionally. Whilst you must seek professional advice, here are some of the key things you should consider in what will be one of the biggest decisions you will make:
- Where do you want to be? Seems obvious but give this some real thought and make sure that you have access to the best choice of available dental practices.
- What type of dentistry would you like to do? Research the area around any potential practice and make sure that the demographics ‘work’.
- A Squat vs. Existing Practice – An existing practice has a patient base and is the safer option. However, a squat is a chance for you to create your own vision and not have to work within the constraints of someone else’s. But, if you choose a squat you have to get it right. Ensure you create a business plan and seek professional advice.
- Leasehold vs. Freehold – Buying a leasehold property can be more complicated than a freehold, but less of a capital investment. The length of the lease will need to be considered, and whether it can be renewed. It may be that the remaining number of years is unacceptable to your bank and the lease will need to be extended. The landlord’s consent to assign the lease will be required and they may require you to pay a rent deposit or provide a guarantor.
- Planning Permission – it is not uncommon for practices to have grown over the years and not have the correct consent for the entire building. Make sure that you check this.
- Finance – how are you going to pay for it? Banks are still lending but they expect so much more from potential clients including substantial deposit, proven track record and up-to-date CV. It is important that you get it right first time. It can be difficult to get over an initial ‘no’ so make sure you seek expert advice.
- CQC – The Care Quality Commission has affected many areas of the profession and buying a practice is no different. You need the right legal advice so that the registration changes don’t hold up the process.
- Valuation/Negotiation – make sure that you are paying a fair price. It is well worth getting your own valuation to ensure that you are not paying over the market value. You are a dentist, not a trained commercial negotiator! To make sure that you get the best possible deal you may want to consider an agent to act upon your behalf and leave you to get on with the dentistry.
- Get your own finances in order. You may need to provide a substantial deposit and prove to a vendor that you’ve got sufficient funds to go through with the purchase. It would be well worth having a conversation with a specialist financial adviser who can support you with the initial preparation and negotiate the best and most competitive terms with the bank on your behalf.
Also, if you haven’ done so already, see ‘Raising Finance for a Practice Purchase’ an article by David Brewer, outlining some top tips on what to do if you are looking to raise finance to purchase a dental practice.