When it comes to buying or selling dental practices, one of the key requirements of our clients is to ensure that the practice sale completes as quickly as possible.
Delays are rarely in the best interests of either buyer or seller. Once a sale is agreed a practice owner has limited motivation to maintain or improve a practice. Further, a buyer is stuck in limbo until the practice sale completes, neither free to fully develop as an associate or a practice owner.
It is important to note that the process of buying or selling a dental practice is likely to take a number of months (rather than weeks to complete), owing to numerous factors.
Where the practice operates an NHS contract, a change to an NHS contract requires notice to the local area team of at least 28 days. A seller may be advised not to serve such notice until following exchange of contracts, meaning there may be around one month between the dates for exchange and the date the practice changes hands.
A significant cause for delay, is the time taken for a CQC registration to be processed. It is a criminal offence to practice dentistry without registration with the CQC and as such a full application is needed before most purchases. Before the application is submitted CQC countersigned DBS (criminal records) checks are needed which can take six weeks. Once the application is submitted to the CQC there is a suggested timescale of eight weeks. However, following the pandemic this is more likely to be closer to 20. It is vital that CQC applications are submitted as soon as possible once a sale has been agreed.
The process of buying or selling a dental practice usually involves the following basic steps:
- Negotiations, offers for the practice, acceptance of the offer
- Due diligence enquiries
- Negotiation of the contract
- Exchange of contracts
- Completion
We would also encourage, where appropriate, practice owners to involve practice managers with the process of due diligence. The information requested in this process can be extensive and the nature of the documents (for example fire risk assessments) are those that practice managers may have to hand, but practice managers may find difficult to locate.
Funding can also cause concerns when it comes to the timing of a transaction. In some deals the funding takes longer than expected to reach the stage of either a formal offer of funding or the drawdown of funds. However, on the flip side if other aspects of the deal take longer than expected the initial offer of funding can expire. This can mean significant expense for a buyer; they could be asked to re-submit their funding applications or they may need to have the practice valuation repeated.
As specialist dental lawyers, we can provide more specific guidance as to the process, ensuring that your acquisition or sale runs smoothly.
The dental team at Brabners constantly look for ways to speed up the process. A well prepared seller and buyer, who understand the process, significantly contributes to ensuring that the practice changes hands sooner, rather than later. Our healthcare team sets a timetable for a sale or purchase to take four months. Although this is a timescale that is frequently missed due to external factors such as the CQC, our experience tells us that setting ambitious targets for all parties on timescale gets deals done sooner.
If you are concerned about the timing of a practice sale please call our Healthcare Team for a confidential conversation.
