The global pandemic is currently restricting movement in the UK and many countries across the globe. Our way of life is temporarily on hold.
Restrictions are affecting business for dentists and most are currently on an emergency only patient list. As self isolation and social distancing settles in patient numbers are down significantly.
Cashflow is likely to be an issue with furloughs of nurses and employees certainly possible. Underperformance is likely for NHS practices in 2019/2020 and 2020/2021. Private patients are cancelling appointments or capitation scheme memberships.
Buyers are concerned about the damage to businesses and within our dental team we are seeing dels both delayed and renegotiated. Our view is that it is important that the parties don’t attempt to re-negotiate too harshly and risk jeopardising the transaction as a whole. It is important to maintain the goodwill within the transaction process.
Sellers are keen to sell but Buyers are keen to buy and understand that this is just a hiccup at the beginning of long and fruitful venture. It is better to look at the transaction with a long term approach.
At the time of writing advice is awaited from the Chief Dental Officer following discussions with NHS England as to how clawback will be dealt with in the 2019/2020 year. If the results of these discussions are fruitful then we expect a sudden surge in demand for NHS practices (rather be an owner who receives a set amount from the NHS regardless of performance than an associate who is only paid when work is done).
For private practice owners there may be a stream of patients currently looking to cancel Denplan or other capitation subscriptions. However, beyond this we are going to see a significant backlog in dental work across the UK. When we are all free to move again patients will be lining up to see their NHS dentist again, which could be an ideal opportunity to expand into the private sector and could in the long run see private patient numbers higher than before the crisis.
A benefit to the current economic downturn and reduced patients through the door, is that buyers and sellers can utilise the time to prepare themselves for the completion of the transaction. Sellers of a dental practice can use the time to collate their due diligence documentation, ensure that their accounts are fully up to date, ensure that all regulations have been complied with and generally just ensure that the practice is presented as an efficient and well run practice. On the other hand buyers can utilise the time to ensure that their funding is secure and ready to go, ensure that their CV and other profiles are up to date (as owners) and even create business plans for when they become the owners of the practice.
