Buying a dental practice is the most thrilling, and the most difficult, aspect of your professional life. Providing vital oral healthcare and cosmetic treatments to the public both rewards you and helps local communities.
Whether you are buying your first practice or you are building a dental group, Samera Business Advisors are here to help you to achieve your goals and build your future.
We’ve been helping the UK’s dentists start their own dental practices for nearly 20 years and, as dental practice owners ourselves, we’ve learned a thing or two about buying dental practices.
For our friends and colleagues who are looking to embark on the journey of dental practice ownership, we hope this guide helps to start you on the path to your future in dentistry!
Click here to read more about why dentists want their own practices.
Starting or buying a dental practice can be a big task, especially if you’re new to the field. The dental market is always changing, so it’s important to stay updated on the latest trends and rules. In the UK, the dental business is growing, and there’s a high demand for good dental services. However, finding the right dental practice to buy can be challenging.
In this guide, we’ll give you all the information you need to understand the dental practice market in the UK. We’ll cover everything from current market trends and regulations to finding the right dental practice that fits your needs and budget. Whether you’re a first-time buyer or an experienced professional looking to expand your business, keep reading to learn how to navigate the dental practice market.
The Current State of the Dental Practice Market in the UK
The dental practice market in the UK is always changing and growing. More dentists are thinking about owning their own practice, whether it’s starting their own practice or expanding an existing one. Whether you’re a new dental graduate looking to set up your own practice or an experienced professional aiming to acquire one, it’s crucial to understand the current state of the dental practice market.
Recently, the dental industry in the UK has seen significant changes. One key factor is the increasing focus on oral health and the growing awareness among the public about the importance of regular dental care, as well as the difficulties faced by many patients in getting NHS dental care. This has led to a higher demand for private dental services like check-ups, cosmetic procedures, and specialized treatments.
Another important factor shaping the market is the changing demographics of the UK population. With an aging population and longer life expectancy, there’s a growing need for dental services that cater to the specific needs of older adults.
Advancements in dental technology and treatment methods have also transformed the industry, offering new opportunities for practitioners to provide high-quality and efficient dental care. Innovations like digital imaging, CAD/CAM systems, laser dentistry, and implantology have not only improved patient outcomes but also changed the way dental practices operate, making many highly specialised in the treatments they offer.
However, despite these opportunities, there are challenges in the dental practice market. The rising costs of running a dental practice, including overhead expenses, regulatory compliance, and insurance requirements, pose financial obstacles for both newcomers and established professionals. Moreover, the competitive nature of the market means that dental professionals must stay updated on the latest trends and developments to attract and retain patients.
In this comprehensive guide, we’ll delve deeper into the various aspects of buying a dental practice in the UK. From understanding the key factors to consider when evaluating potential practices to navigating the legal and financial aspects of the acquisition process, this guide aims to provide aspiring practice owners with the knowledge and tools needed to make informed decisions in the ever-changing dental practice market.
Action Points:
- Conduct a thorough market research assessment of the areas you in which you want to buy.
- Assess and be honest to yourself about your financial situation.
- Develop a detailed business plan.
- Seek professional guidance from a dental practice sales agent.
Understanding the different types of dental practices available for purchase
When thinking about buying a dental practice, it’s important to understand the different types available for purchase. Each type has its own unique qualities, and making an informed decision will greatly impact your success as a practice owner.
- Solo Practice:
This is a dental practice owned and operated by a single dentist.
It allows complete independence and control, making it a popular choice for dentists who prefer working on their own.
- Partnership Practice:
Involves two or more dentists owning and running the practice together.
This arrangement allows for shared responsibilities, accountability, and financial risks. It’s great for dentists who want to collaborate with colleagues and share costs.
- Group Practice:
Involves multiple dentists working together under a single practice name or brand.
These practices often have a centralized management structure, providing operational efficiencies and support services. They may offer a wider range of dental services and the potential for more patients.
- Associateship:
A form of employment where a dentist works under the ownership of another dentist or practice.
Dentists can gain experience, build their patient base, and learn from established professionals. It can be a stepping stone to owning a practice in the future or a long-term career choice.
- Specialist Practice:
Focuses on providing specific dental services, such as orthodontics, periodontics, endodontics, or oral surgery.
These practices require additional training and expertise in specific areas of dentistry. Buying a specialist practice can be a rewarding opportunity for dentists with specialized skills or those looking to expand their service offerings.
Understanding these types of dental practices will help align your goals, preferences, and skills with the right practice. It’s crucial to carefully evaluate each option, considering factors like your experience, financial capabilities, desired level of independence, and long-term objectives. Taking the time to research and consult with professionals in the field will ensure you make an informed decision and position yourself well in the dental practice market.
Action Points:
- Solo Practice Analysis: If considering a solo practice, evaluate your readiness for complete independence. Assess your ability to handle both the clinical aspects and the business management side of running a practice. This includes financial management, staff hiring, and patient acquisition strategies.
- Partnership Practice Considerations: When thinking about a partnership practice, it’s crucial to identify potential partners whose vision, work ethic, and business goals align with yours. Draft a clear partnership agreement that outlines roles, responsibilities, profit sharing, and conflict resolution mechanisms.
- Group Practice Dynamics: For those interested in a group practice, research the operational structure and management systems of existing group practices. Understand how patient care, administrative tasks, and financial responsibilities are divided among the dentists. Consider the scalability and diversity of dental services offered.
- Associateship Pathway Exploration: If leaning towards associateship, look for practices that offer growth and learning opportunities. Evaluate the terms of employment, including the scope for future partnership or ownership possibilities, mentorship availability, and the practice’s patient demographics and case types.
- Specialist Practice Viability Assessment: In case of a specialist practice, conduct a market analysis to gauge the demand for the specialized services you intend to offer. Ensure that you have the required certifications or are prepared to invest in additional training. Also, consider the potential referral networks and collaborations with general dental practices.
How Long Does it Take to Buy a Dental Practice?
The short answer to this question is: it takes as long as the buyer and seller allow it to take.
Like any important transaction, buying a dental practice hinges on whether or not the buyer and seller can agree upon a price and contract terms. As the buyer, you are expected to make the initial offer on the practice, with negotiations to follow.
However, there are many tasks that you, or a representative like Samera Business Advisors, must perform in order to make sure that your transaction is legal and your resources are secure. These include:
- Care Quality Commission (CQC): The timing and execution of your CQC application is crucial to ensure that you are ready to begin operation of your practice after ownership is transferred; without CQC approval you won’t be able to trade.
Click here to find out more about registering with CQC - Funding: Unless you plan on financing your transaction in cash, you will likely be using your bank for funding. Banks are notoriously cautious. Both parties will need to agree the terms of borrowing with a business manager, and the contract will need to be approved by the bank’s Securities Department. Using a finance broker will help you ensure you consider all the funding options available in the market.
Click here to watch our free webinar and find out more about financing your first dental practice - Property and Leases: Often, the property side of the transaction can slow the deal down. It’s important you have a property lawyer that can assist in ensuring any lease in place can be assigned to you as new owner.
Click here to find out more leasehold vs. freehold.
Factors to consider when buying a dental practice: location, patient base, and competition
When thinking about buying a dental practice in the UK, there are important things to consider that can greatly affect its success. These factors should be carefully thought about during the decision-making process.
- Location:
The first thing to think about is where the dental practice is located. A convenient and easily accessible location is crucial for attracting and keeping patients. It’s best if the practice is in a well-populated area known for dental services. Being close to public transportation and having enough parking options can also make it more convenient for patients.
You need to be honest and realistic about your goals. Most of you may want to own a practice on Harley Street and live in Central London, but how realistic is that? If you want to own a practice at a good price, you may need to consider living in a part of the country you never envisioned yourself in.
You’ll need to reconcile your business goals with your lifestyle and family goals.
- Patient Base:
Another important factor is the existing patients of the dental practice. Understanding the demographics of the current patient base gives insights into the potential for growth and success. Things like age, income level, and dental insurance coverage can help plan marketing strategies and services that meet the specific needs and preferences of the patients.
- Competition:
It’s equally important to assess the competition in the area. Analyzing the number and types of other dental practices nearby helps determine the level of competition and how saturated the market is. It’s also important to consider the services offered by competitors and any unique features that can make the practice stand out.
- Growth Potential:
Evaluating the growth potential of the dental practice is essential. Factors like population trends, economic indicators, and the potential for new patients can impact the long-term viability and profitability of the practice. Conducting market research and seeking expert advice can provide valuable insights into growth prospects in a specific geographic area.
By carefully considering the location, patient base, competition, and growth potential, potential buyers can make informed decisions when navigating the dental practice market in the UK. These factors will help ensure that the purchased practice has a solid foundation for success and long-term profitability.
Action Points:
- Location Evaluation:
- Map potential locations, assessing their accessibility, visibility, and proximity to public transport and parking.
- Balance your ideal location aspirations with realistic financial and lifestyle considerations.
- Visit different areas to understand local dynamics and lifestyle fit.
- Patient Base Analysis:
- Obtain demographic data of the existing patient base, focusing on age, income, and insurance types.
- Develop targeted marketing plans based on these demographics.
- Conduct surveys or focus groups to understand patient needs and preferences.
- Competition Assessment:
- Identify and visit other dental practices in the area to gauge services offered and client volume.
- Analyze market gaps that your practice could fill.
- Plan unique services or approaches to differentiate your practice from competitors.
- Growth Potential Evaluation:
- Research local population growth trends and economic indicators.
- Consult with a market analyst for insights into the dental market in the area.
- Develop a long-term growth strategy based on this research.
Dental Practice Valuations and Due Diligence
You must get a valuation from an established provider to receive an accurate purchase price of the dental practice for sale. Always remember, the valuation from the seller needs independent assessing. Do your own homework and employ your own valuer to ascertain if the dental practice for sale is really worth what the seller is asking for!
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is currently used as part of the dental practice valuation process.
It’s important to remember that every practice is different. There are several factors that can form part of the value of a practice, including the accounts over the previous three years, the potential for development and expansion and whether a time limited (PDS) NHS contract is in place or an open ended (GDS) NHS contract.
Read our article on dental practice valuations to find out more.
Contact us to find out more
Keep in mind you are not just buying real estate, you are buying a business. This may be the foundation of the next 30 years of your professional life! You must take the time to learn every facet of the dental practice for sale.
Once you know which dental practice you would like to purchase, it’s essential to know that you are investing in the right one. It’s too late to have regrets and doubts after you have signed contracts. This is an investment in the following years of a dental professional’s life, so it’s important to make sure everything is in order.
Click here to listen to our podcast episode on the 7 legal pitfalls of buying a dental practice.
From the accounting to the exterior bricks and mortar, a magnifying glass must be applied everywhere. A specialist dental lawyer will know the right questions to ask so you can assess the business and plan for its growth.
You will also want to ask an experienced accountancy firm to review the financials and check the numbers for validity now and potential in the future. Management information, details from the software system and other important financial information will help you get a much better picture of the health of the business too.
Click here to find out more about what to look for in a dental accountant.
As part of the due diligence process, your solicitor must request the seller to guarantee that the supplied information is correct in order to protect against any loss caused by misrepresentation.
There are certain aspects of due diligence that dentists themselves are best placed to examine, such as the way the practice operates and the treatments that are provided. However, when it comes to legal and financial considerations, a specialist dental solicitor and dental accountants should be part of the team.
It’s never a good idea to proceed without this expert help. Professionals know what questions to ask and what to look for in accounts and financial records. I have worked with many clients to co-ordinate the due diligence process, during the dental practice acquisition process, so I know how important an expert eye is.
What is Included in the Due Diligence Process when Buying a Dental Practice?
“Due diligence is the process of evaluating a business from all aspects before making a purchase decision…It includes specific elements that can vary based on the situation and the nature of the business. Due diligence protects both parties but primarily the purchaser. It can uncover potential liabilities and financial matters and make sure nothing is hidden.”
Jean Murray, The Balance, 2018 (4)
Include everything that pertains to the viability of the business in due diligence. Do not leave anything to chance. From the building itself, to treatment lists, accounts and software, everything needs to be checked in microscopic detail. Too often I have seen clients getting ahead of themselves. Take a step back from the buying edge and make sure every aspect of the practice is viable, before taking the leap into purchasing.
There are several different points to consider when checking documentation during the due diligence process; too many to list here. However, I have found that some of the most important checks to complete include:
- Are the services currently provided at the practice a good match to the services that can be provided should the sale progress?
- Is the ethos of the seller similar to the ethos which will continue?
- Does billing match procedures that were carried out?
- Does cash recorded match what is reflected in tax returns?
- What are the current wage demands of the practice?
- What are the property rental terms?
This is only a fraction of what should be considered as part of due diligence when buying a dental surgery. Take time to make sure that every detail has been scrutinised. This is an important business and life decision that is being made, so do not take any chances. Remember to obtain a guarantee from the seller, as to the accuracy of the information provided. This provides protection against any future financial or legal issues caused by misrepresentation.
Action Points:
- Independent Valuation:
- Hire an independent valuer to assess the practice’s worth.
- Compare the seller’s valuation with your independent assessment.
- EBITDA Analysis:
- Review the Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) as part of the valuation.
- Analyze the practice’s financial health over the past three years.
- Potential for Development:
- Assess the potential for development and expansion of the practice.
- Consider the type of NHS contract in place (PDS or GDS) and its impact on the practice’s value.
- Legal and Financial Expertise:
- Engage a specialist dental lawyer for legal due diligence.
- Consult with an experienced dental accountancy firm to review financials and validate projections.
- Seller’s Guarantee:
- Ensure that your solicitor requests a guarantee from the seller for the accuracy of the provided information.
- Operational Due Diligence:
- Personally evaluate the operational aspects like treatment quality and practice management.
- Match the services provided with your capabilities and future plans.
- Financial Checks:
- Verify billing accuracy and cash flow against tax returns.
- Review the current wage demands and rental terms of the property.
- Comprehensive Review:
- Scrutinize all aspects of the practice, including the building, equipment, accounts, and software systems.
- Ensure that the ethos of the practice aligns with your vision.
Negotiating the Price and Terms of the Deal
When it comes to buying a dental practice at the right price, figuring out the details of the price and deal terms is a crucial step. This is your chance to make sure you’re getting the best value for your investment and that the specifics of the deal match up with your goals. Remember, you make your profit when you buy at the right price and add value over the lifetime of your ownership.
First off, doing your homework and gathering as much information as possible about the practice is important. This includes checking the financial records, looking at the types of patients, evaluating the equipment and facilities, and understanding how much similar practices are worth in the current market. Armed with this information, you can confidently enter discussions with the seller.
One key thing to think about is the price tag. It’s crucial to have a clear understanding of how the price is set and if it makes sense based on the practice’s financial performance and potential for growth. It’s essential to get help from a professional valuer or a dental practice expert who can give an independent assessment of the practice’s value and guide you through the negotiation process.
Working out the details of the deal is just as important. This includes figuring out the payment structure, financing options, and any conditions that need to be met before the sale is finalized. For instance, you might want to include plans for a smooth transition period where the current owner helps with handing over patients and staff.
During negotiations, being flexible but also firm in your position is crucial. Be prepared to justify your offer or counteroffer with solid reasoning and evidence. Remember, it’s a two-way process, and finding an agreement that benefits both parties is the ultimate goal. A clear, honest and open conversation is crucial.
It’s highly recommended to engage the services of a legal professional experienced in dental practice acquisitions. They can make sure all the necessary legal documents are in place and help protect your interests throughout the transaction.
In summary, negotiating the price and terms of the deal is a critical step in buying a dental practice. By doing thorough research, seeking professional help, and staying persistent during negotiations, you can secure a deal that puts you in a good position in the dental practice market.
Action Points:
- Independent Valuation:
- Engage an independent valuer to provide a realistic appraisal of the practice’s worth.
- Use this independent valuation as a basis for your negotiations.
- Market Conditions Assessment:
- Research current market conditions, including demand for dental services in the area and recent sale prices of similar practices.
- Use this data to argue for a price that reflects the current market.
- Negotiation Preparation:
- Prepare a well-founded argument for your proposed price, backed by your research and valuations.
- Be ready to explain why your offer is fair and reasonable.
- Flexible Yet Firm Approach:
- Enter negotiations with a flexible mindset, but be firm on your maximum budget.
- Be prepared to walk away if the price exceeds what you believe is fair value.
- Counteroffer Strategies:
- If the seller’s initial price is too high, present a counteroffer with justification.
- Include aspects like needed renovations, equipment upgrades, or other investments as reasons for your counteroffer.
- Consider Total Acquisition Cost:
- Factor in additional costs such as legal fees, renovation expenses, and equipment upgrades when negotiating.
- Negotiate a price that accounts for these extra investments.
- Use Conditions as Leverage:
- If certain conditions (like lease terms, equipment status) are not ideal, use these as leverage to negotiate a lower price.
- Highlight how these factors will incur additional costs for you post-purchase.
- Professional Assistance:
- Consider hiring a negotiation expert or a dental practice broker who specializes in such transactions.
- Their expertise can be invaluable in achieving a favorable price.
Legal Considerations When Buying a Dental Practice
When it comes to buying a dental practice in the UK, there are important legal and regulatory things you need to know. These considerations are crucial to make sure the transition into owning and running a dental practice goes smoothly.
First and foremost, it’s crucial to understand the legal requirements set by the General Dental Council (GDC). The GDC sets standards and rules that all dentists must follow, covering professional conduct, clinical management, and patient safety. It’s important to check that the practice you’re looking at meets these requirements and that the current owner has stayed compliant.
Also, if you’re buying a dental practice that already has employees, you should carefully review the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). These rules are in place to protect employees’ rights during a change of ownership. Understanding your responsibilities as the new owner regarding employee contracts, terms, and conditions is crucial.
Another important thing to think about is the legal structure of the dental practice. You can choose to buy the practice as a sole trader, partnership, or limited company. Each structure has its own legal and tax implications, so it’s a good idea to consult with a legal professional or an accountant to figure out the most suitable option for your specific situation.
In addition to these legal considerations, it’s important to conduct thorough due diligence on the practice you’re thinking of buying. This might include reviewing financial records, contracts, leases, and any existing liabilities. Getting the help of an expert experienced in dental practice acquisitions can ensure that all legal aspects are properly addressed, and you’re fully informed before going through with the purchase.
By carefully looking into the legal and regulatory aspects involved in buying a dental practice in the UK, you can ensure a successful and smooth transition into ownership, paving the way for a prosperous future in the dental industry.
Action points:
- General Dental Council (GDC) Compliance:
- Verify that the practice adheres to GDC standards, including professional conduct, clinical management, and patient safety.
- Ensure that all practicing dentists at the practice are registered with the GDC and compliant with their regulations.
- Employee Rights under TUPE:
- Review the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) to understand your responsibilities regarding existing employees.
- Assess employee contracts, terms, and conditions, ensuring that their rights are preserved during the transition.
- Choosing the Legal Structure:
- Evaluate different legal structures for owning a practice, such as sole trader, partnership, or limited company.
- Consult with a legal professional or accountant to determine the most beneficial structure for your situation, considering legal and tax implications.
- Due Diligence Process:
- Conduct a comprehensive due diligence investigation, including financial records, contracts, property leases, and existing liabilities.
- Utilize the expertise of a professional experienced in dental practice acquisitions to ensure all legal aspects are thoroughly examined.
- Regulatory Requirements Check:
- Ensure compliance with other relevant regulations, such as health and safety standards, data protection laws, and any specific local council requirements.
- Plan for any necessary updates or changes to maintain regulatory compliance post-purchase.
- Consult Legal and Financial Experts:
- Engage with legal advisors and financial experts who specialize in dental practice transactions.
- Use their expertise to navigate complex legal and financial aspects of the acquisition process.
- Insurance and Liability Considerations:
- Review and update insurance policies, including malpractice, property, and liability insurance, to reflect the new ownership.
- Understand your liabilities as the new practice owner, including any outstanding debts or legal issues associated with the practice.
- Contract Review and Negotiation:
- Examine all existing contracts, including supplier agreements, lease agreements, and service contracts.
- Negotiate terms as necessary to align with your operational plans and legal obligations.
- Post-Acquisition Compliance:
- Develop a plan for maintaining CQC compliance with all relevant regulations and standards after taking ownership.
- Stay informed about any changes in dental regulations and standards that may impact your practice.
Raising the Finance to Purchase a Dental Practice
When it comes to buying a dental practice, funding might be the most important thing to think about. It’s crucial to explore different funding options to make sure the transition is smooth and the growth is sustainable, if you can’t fund the purchase yourself.
One option is, of course, traditional bank loans. Many banks have special loan programs for healthcare professionals, like dentists. These loans usually have competitive interest rates and flexible repayment terms tailored to the specific needs of dental practice owners. However, getting a bank loan will require a strong financial history and collateral.
Another funding option to consider is seller financing. In this arrangement, the current owner acts as the lender and provides a loan to the buyer. This can be beneficial for both parties, allowing more flexibility in negotiating the terms of the loan. Seller financing may involve an initial payment and regular installments over a set period.
There are also specialized healthcare banks and dental practice finance companies that focus specifically on funding dental practice acquisitions. These lenders understand the unique financial needs of dental professionals and can offer customized funding solutions that align with the cash flow and revenue projections of the practice.
Another avenue to explore is seeking investment from partners or dental associates. This could involve bringing on a partner who contributes to the initial purchase cost and becomes a co-owner of the practice. Alternatively, dental associates might invest in the practice in exchange for a future ownership stake.
Lastly, it’s crucial to consult with a financial advisor specializing in dental practice acquisitions. They can provide guidance on the best funding options available, help navigate the financial aspects of the purchase, and ensure that the chosen funding strategy aligns with the long-term goals of the buyer.
Overall, exploring different funding options is crucial to finding the best solution for buying a dental practice. Each option has its own advantages and considerations, and it’s important to carefully evaluate them to make an informed decision that supports the growth and success of the practice.
How Much Will You Have to Pay?
A deposit of at least 10-20% is standard when buying a dental practice, whilst the remainder can be financed from a bank. The minimum cash deposit will usually be 5%.
It’s important to remember that when the lenders use their estimate of 80% of the value, they’re only estimating that value on goodwill. They do not include the fixtures and fittings in that. This is especially important to remember if the fixtures and fittings figure it quite high.
Click here to watch our webinar on the fees and costs of buying a dental practice.
When a lender assesses your loan application they will be looking at a variety of factors. These include:
- Your earning history as an Associate Dentist
- Your financial track record and how you have managed your personal finances e.g. do you have high credit card balances is always a bad time to apply for a loan.
- Your current living situation i.e. do you own your own house or rent?
- Your management experience and number of years you have from leaving Dental School
- Your ability to repay the loan with a comfortable margin of error if interest rates rise
- If you place an offer for a practice and do not have available funds (or a finance agreement in place) you risk being unable to buy a practice whilst losing credibility with a seller.
Click here to read more about financing a dental practice.
Check the Ratios and Find the Potential Profit
It’s important to chart the potential profit of your new dental practice. How much of an opportunity for growth do you see?
Make sure you ask how many active (seen in the last 10 months) patients the practice has. Out of those active patients, what are the ratios between check-ups versus treatments? That will give you a birds-eye-view of the type of work and, therefore, cash flow you are inheriting.
Ask the seller for a short (3-5 examples) list of their most outstanding treatments to gauge the effectiveness of their follow up system. If the seller is a member of a local business referral group or association, follow up with other members. After all, you are entering their community and early networking prevents many headaches.
Click here to watch our webinar on the top 10 mistakes to avoid when buying a dental practice.
Contact us to find out more
Key Performance Indicators (KPIs) like these reveal the day-to-day work being done to maximize the practice’s earning potential. There are a number of dental KPIs, but let’s look at a few basic numbers you must ask for:
- How many new patients have they generated in the last 12 months? Is this rate on the rise?
- What are the exam and hygiene recall rates? Are they rising?
- What marketing is working the best for the practice and which marketing avenues are exhausted?
- What’s the level of new patients received from direct referrals?
- What is the patient retention rate? How many patients did the practice lose over the last 12 months?
This will help you to understand how good the patient experience is and what you can do to improve it.
Action points:
- Research Loan Options: Explore bank loans for healthcare professionals and compare terms.
- Consider Seller Financing: Assess seller financing as a flexible alternative for funding.
- Seek Specialized Lenders: Look into healthcare banks and dental finance companies for custom solutions.
- Explore Partnerships: Think about joint investments with partners or associates for shared ownership.
- Consult a Financial Expert: Get advice from a financial advisor experienced in dental practice acquisitions.
- Prepare for Deposit: Ready a deposit of 10-20% for the practice’s value.
- Understand Lender Valuations: Know how lenders value practices, especially concerning goodwill and fittings.
- Evaluate Loan Eligibility: Check your qualifications for loans, considering your financial history and professional experience.
- Assess Practice Profitability: Analyze patient ratios, treatment types, and referral networks to gauge potential profits.
- Review Key Performance Indicators (KPIs): Examine KPIs like new patient rates, recall rates, marketing effectiveness, and patient retention.
Managing the Transition Period Effectively
Owning your own practice can be both exciting and challenging. It’s crucial to handle this transition period well to ensure a smooth and successful change. Here are some important tips to help you navigate this process with confidence and clarity.
Firstly, being open is crucial during the transition period. Maintain open and honest communication with the previous owner, staff, and patients. This will build trust and ensure a smooth transfer of responsibilities. Schedule regular meetings or check-ins to address concerns, provide updates, and create a supportive environment for everyone involved.
Next, learn about the practice’s existing systems and processes. Take the time to understand the daily operations, patient management procedures, and financial aspects of the practice. This knowledge will help you identify any areas that need improvement or adjustment to align with your vision and goals as the new owner. Implementing changes gradually and with sensitivity will help maintain stability and minimize disruption.
Also, value the expertise of the current staff. They have valuable knowledge and experience that can contribute to the success of the practice. Encourage open discussion, listen to their insights, and establish a collaborative environment where everyone feels valued and motivated. This will facilitate a smooth transition and ensure continuity of care for patients.
Additionally, consider seeking guidance from experienced dentists or mentors who have gone through practice transitions. They can offer valuable advice and support, helping you navigate potential challenges and make informed decisions. Their expertise can be crucial in ensuring a successful transition and preparing you for long-term success as a practice owner.
Lastly, prioritize patient care during the transition. Communicate any changes or updates to patients in a clear and compassionate manner. Assure them of your commitment to maintaining the highest standards of dental care and address any concerns or questions they may have. Building trust and a positive reputation from the start will help retain existing patients and attract new ones.
By effectively managing the transition period, you can establish a solid foundation for the future success of your dental practice. With clear communication, a thorough understanding of the practice’s operations, collaboration with staff, and a focus on patient care, you can navigate this stage with confidence and position yourself for a thriving dental practice in the UK.
Many dentists who are selling their practice factor in a sense of legacy to the transaction, and may be more willing to negotiate with someone who can show respect for their accomplishments – while also being conscious of their own ambitions.
Click here to find out more about patient retention.
A good relationship with the seller is really help keep the process smooth. Not only that, some sellers may wish to remain working in the practice for some time. Others may still have close connections in the practice’s staff. Keeping the seller happy and onside will really make things easier for you.
Click here to find out more about selling a dental practice.
Action points:
- Maintain Open Communication: Regularly engage with the previous owner, staff, and patients to build trust and facilitate a smooth handover.
- Understand Practice Operations: Learn about existing systems, patient management, and financial aspects to identify improvement areas.
- Value Staff Expertise: Recognize and utilize the current staff’s knowledge and experience; foster a collaborative and supportive environment.
- Seek Experienced Guidance: Consult with experienced dentists or mentors who have undergone similar transitions for advice and support.
- Prioritize Patient Care: Ensure clear communication with patients about changes, maintaining high care standards and addressing concerns.
- Respect Legacy: Show appreciation for the seller’s legacy and achievements, balancing it with your own vision and goals.
Keep the Dental Team
We think it is important to retain the team when you buy a new practice. Think of them as one of the assets of the business. They already have the trust of and their own loyalty to your patients, they are more loyal to each other and the practice (in most cases) and they have the knowledge of the business.
If you buy a dental practice and start getting rid of staff, you’re also getting rid of knowledge and experience. Not just in dentistry in general, but in your practice in particular.
If you want to build that loyalty and trust between yourself and your team as the new owner, consider holding one-to-one meetings, or group meetings with different teams, like your nursing or orthodontic teams.
Also, look at their pay. Make sure they are at least in line with national averages and include performances bonuses – there aren’t many better ways to get a team onside!
Enroll the whole team in your vision for the practice, it’ll make it easier to realise.
Click here to read more about building a dental team.
Action points:
- Value the Existing Team: Recognize the team as a vital asset, appreciating their established patient relationships, loyalty, and business knowledge.
- Avoid Unnecessary Staff Changes: Understand that retaining staff maintains valuable experience and continuity within the practice.
- Conduct Personal Meetings: Schedule one-to-one or team meetings to establish rapport, understand individual roles, and communicate your vision.
- Review Compensation: Ensure staff salaries align with national averages and consider implementing performance bonuses to foster motivation.
- Share Your Vision: Actively involve the team in your future plans for the practice, encouraging their participation in realizing these goals.
Dental Practice Marketing
Building a successful dental practice involves more than just providing quality dental care. It requires effective marketing, patient retention strategies, and a focus on growth. In this section, we will explore some key strategies that can help you establish and grow your dental practice in the UK.
Click here to find out more about marketing a dental practice.
Make sure to ask the seller about the marketing relationships they’ve forged during their time at the practice. Ask them what ways they’ve advertised in the past, and if there were any open accounts with dental marketing specialists that you could utilize.
Firstly, marketing plays a crucial role in attracting new patients and creating awareness about your dental practice. Using both traditional and digital marketing methods can help you reach a wider audience. This may include creating a professional website to showcase your services, implementing search engine optimization (SEO) techniques to improve your online visibility, and using social media platforms to engage with potential patients.
It is important to check what their online presence is at the moment. How high does their practice rank in google in their area among dentists? Do they already have brand-awareness online? Do they have a large following on Facebook or Instagram that you can leverage?
In addition to attracting new patients, focusing on patient retention is equally important. Building strong relationships with your patients is essential for their loyalty and long-term satisfaction. Implementing strategies such as personalized communication, offering loyalty programs or discounts for returning patients, and providing excellent customer service can go a long way in ensuring patient retention.
Moreover, growth should always be a part of any dental practice. This can be achieved through various strategies, such as expanding your range of services to meet the changing needs of your patients, investing in advanced dental technologies that enhance patient experience and outcomes, and actively seeking referrals from satisfied patients.
It is also crucial to continuously evaluate and analyze your practice’s performance. Regularly reviewing patient feedback, tracking key performance indicators (KPIs), and making necessary adjustments based on the data can help you identify areas for improvement and make informed decisions to drive growth.
By implementing these marketing, patient retention, and growth strategies, you can position your dental practice for success in the competitive UK market. Remember, building a successful dental practice is an ongoing process that requires dedication, adaptability, and a commitment to providing excellent dental care to your patients.
Click here to read our article on How To Market A Dental Practice
Action points:
- Develop a Marketing Strategy:
- Utilize both traditional and digital marketing methods.
- Create a professional website and apply SEO techniques for better online visibility.
- Engage with potential patients on social media platforms like Facebook and Instagram.
- Evaluate Online Presence:
- Assess the practice’s current online ranking and brand awareness.
- Leverage any existing social media following.
- Focus on Patient Retention:
- Build strong relationships through personalized communication.
- Offer loyalty programs or discounts for returning patients.
- Maintain high standards of customer service.
- Plan for Growth:
- Expand service offerings to meet evolving patient needs.
- Invest in advanced dental technologies to enhance patient experiences and outcomes.
- Encourage patient referrals to attract new clients.
- Analyze Practice Performance:
- Regularly review patient feedback and track key performance indicators (KPIs).
- Make data-driven adjustments for continuous improvement.
Contact us to find out more
Using a Specialist Dental Solicitor
Placing an attractive offer on your future dental practice is one of the most essential elements in completing a successful purchase. After all, if the seller doesn’t like your proposal, they will simply move on to the next buyer – there is no prize for second place.
To ensure that your offer is fair (to both you and the seller) we always recommend enlisting the services of a professional dental solicitor. A good solicitor will carry out due diligence, negotiate the property aspect of the deal and look at the NHS contract with you. In essence, they make sure all of the t’s are crossed and i’s are dotted, so you don’t have to.
It is important to research the right solicitor for your transaction. Check in with colleagues to see if they have any firms that they’ve used in the past, do your research, and interview several providers until you find the “right fit” for you.
By joining the Samera Alliance, we can put you in contact with our legal partners for their help in buying a dental practice.
Click here to find out more about the Samera Alliance.
Our Expert Opinion
“Over the last 20 years I have personally been involved with several hundred dental practice purchases. From first time buyers to large corporate groups, I have seen most things across the accountancy and financial spectrum.
Many inexperienced buyers, feel they have to offer the price the vendor wants for the practice, whilst sometimes the price may be justified, often it isn’t, so when you start your journey of buying a dental practice, it is imperative to get some help in the process.
I would recommend the following steps when buying a dental practice.
- Think hard about the location, type and size of practice you are buying – NHS/Mixed or Private? For your first practice don’t underestimate if you have to travel quite far the impact this can have on your life. Some better deals maybe available away from the main cities, but this often means you having to compromise on lifestyle -it has to be a very personal decision.
- Early in the process understand how much you can borrow with the deposit you have in place. If you don’t have a deposit, start saving early. Get in touch with the Samera Finance team, they should be approached early on as they will be able to help you understand the maximum you can borrow and hence the size of practice you can purchases.
- Register with all the agents on the market and as I mentioned before be quite ruthless about what you want to buy. Don’t be pressured by any of the agents, as remember they are being paid by the vendor to get the best sale price.
- Go and see as many practices as possible – the more you see the better the idea you will get as to what you like but more importantly don’t like.
- If you like the look of a practice, ask the agent for up to date accounts and information. If up to date information is not available, ask the question why not? If the vendor is serious they could at least spend a few thousand pounds to provide some transparency to you.
- Once you have the required information, it’s imperative to analyse this and assess what the practice is worth to you. Do your own sums, or work with a firm like ours, who has done this so many times. This is the opportunity to offer a price that works for you.
- Of course there may be some negotiation but eventually a price maybe settled on, however, this is still near the beginning of the buying process and a lot can still change!
- Lawyers will need to be engaged and heads of term drafted which outline the deal value and structure. Once these are agreed the proper due diligence begins.
- At this stage too, you will need to decide how you will be funding the purchase, again speaking to our finance team.
- Whilst legal and clinical due diligence occurs, one of the most important aspects that needs to be carried out is financial due diligence. Do the numbers presented actually represent reality? This is so important as things may be found that can provide you the opportunity to re-negotiate the price. Unfortunately I have seen some dentists ignore this step at their peril, only realising after they have taken ownership that they have been ripped off!
- Once all the legal aspects have been covered, then the legal exchange and completion occur, and then you have the excitement of being the new owner of your dental practice!
It’s a long process, and requires tenacity, and of course paying for professionals who know what they are doing.
Don’t cut corners on probably one of the biggest investments you make in your life, as this may come home to roost if you do!
Good luck and get in touch with the Samera team who can help”
Conclusion: Final Thoughts on Buying a Dental Practice
In summary, exploring the dental practice market in the UK needs careful thinking and thorough research. Buying a dental practice is a big investment and a decision that should be taken seriously.
Firstly, it’s important to conduct a detailed analysis of the market and identify potential areas for growth and profitability. Understanding the local demographics, competition, and demand for dental services will help you make an informed decision.
Moreover, seeking professional advice from dental practice consultants, accountants, and experts is highly recommended. These experts can guide you through the legal, financial, and regulatory aspects of buying a dental practice, ensuring a smooth and successful transition.
Additionally, assessing the current patient base, practice reputation, and infrastructure is essential. Look for practices with a solid history, positive patient reviews, and up-to-date equipment that aligns with your vision for the future.
Funding options should also be thoroughly explored, whether through traditional lenders, dental-specific lenders, or seller financing. Having a well-structured financial plan will contribute to the long-term success of your dental practice.
Finally, don’t forget the importance of effective marketing and building strong relationships with your patients. Use various marketing strategies to attract new patients and retain existing ones, such as online presence, referral programs, and patient education initiatives.
In conclusion, successfully buying a dental practice in the UK requires a combination of strategic planning, due diligence, and professional guidance. By carefully considering the key points highlighted in this guide, you will be better equipped to make informed decisions and embark on a rewarding journey as a dental practice owner.
Buying a Dental Practice FAQs
Why Should You Use A Dental Practice Broker And Dental Sales Expert Such As Samera When Buying A Practice?
We have a personable and sustainable relationship with our registered buyers, and we always strive to match the right practice with the right buyer. We listen to each buyer and discuss their selection criteria, sourcing the right practice.
What is EBITDA?
EBITDA is (E)arnings (B)efore (I)nterest, (T)axes, (D)epreciation and (A)mortisation it is an industry-standard way of determining a business’s profit and overall financial performance.
It is one of the key metrics we use to valuate dental practices.
What Is Due Diligence?
Due diligence is a very important exercise carried out during any dental practice sales and acquisitions process.
It is divided into legal and financial due diligence. It is an exercise to confirm that all information provided at the time of discussing and agreeing to offers is accurate and precise.
Information such as accounts, management accounts, patients number, staff contracts, NHS contracts and any legal issues such as change of control clauses, lease and property contracts, are just some of the documents to be checked and diligently controlled.
An expert legal and financial team will know what to look for in a professional and time-effective way.
Why Should I Carry Out The Due Diligence Exercise?
After you visit the practice and check the property and surrounding areas, have a good look at the last 3 years’ financial statements. Find out if the turnover is steadily increasing or decreasing and check if the private revenue is made up of fee-per-item or capitation scheme.
You also want to check if the number of full-time equivalent dentists is less than the number of surgeries, so that there is an opportunity to increase the workload and the revenue.
If the practice is incorporated, make sure that there is not a ‘change of control clause’ in the NHS contract and, if you are buying halfway through the year, check the performance of the UDAs delivery to avoid any unwanted clawback in the next financial year.
Do I Need A Specialist Dental Lawyer?
Never consider the services of a solicitor or a firm with no experience with dental practice sales.
It’s that simple. But occasionally we experience some dental principals going down the route of a solicitor who may be brilliant dealing with purchasing houses, but could slow down the process of selling or buying a practice, potentially increasing your legal fees or asking unnecessary or more than necessary due diligence documentation to complete, ending up wasting precious time.
You can find out more about the legalities of buying and selling a dental practice here.
How Do You Value A Dental Practice?
Every practice is unique and every single dental practice has a price range of value, dictated by many factors and many variables.
It is important to look at the last 3 years’ set of accounts as well as the latest and up-to-date management account to see any upward or downward income trend. The surgery percentage of utilisation and opportunity to expand are also factors that can potentially increase value and marketability.
You can find out more about dental practice valuations here.
How Long Does The Dental Practice Sales Process Take?
The average timescale for a dental practice sales deal to complete is approximately 5 or 6 months.
However, there are many factors, such as the type of practice and the legal and financial support team selected, that can influence the timeframe and speed up or slow down the process of buying a practice.
What If I Buy A Practice With NHS Contract?
If you’re buying a dental practice with an NHS contract, ask for the electronic copy of the GDS or PDS contract, checking all variations and any potential change of control clauses.
Regarding the sale of the dental practice with the NHS contracts, there will be 28 days’ notice between exchange and completion to add to the NHS element of the deal.
What Is The Dental Practice Sales Process?
We like to simplify the process of buying and selling a dental practice to 8 major steps.
Initial enquiry – the vendor sends the completed data collection form to Samera and initial discussion with our team takes place.
Valuation and practice visit – this is when we confirm the key variables and arrange a visit at the practice and our report is discussed with the vendor(s). Phase one of Samera marketing process is explained and begins straight after the meeting.
Viewings – Phase 2 of Samera marketing process. This consists of arranging appointments with potential buyers that have already been screened and viewing the property.
Offer stage – we negotiate the best financial package and best terms, then Heads of Terms are negotiated and agreed.
Due diligence – key information and documents are reviewed by legal teams.
Ongoing Support – we are there at every step of the way, supporting sellers during the financial and legal due diligence for a smooth completion.
Completion – sales and transfer of funds to the vendor’s bank account.
Does The Practice Need To Have A Partnership Structure?
No, not necessary. A buyer will always consider private limited companies and sole traders. Each one is treated differently from a legal perspective and the way in which NHS England is informed is different depending on whether the vendor decides to sell the dental practice via assets sale or shares sales.
What Issues Do You Come Across When Dealing With Dental Practice Sales?
We have never encountered an issue that we can’t resolve.
No practice is the same, but we have never encountered an issue that we can’t resolve; sometimes it just takes a little longer. Any problems usually come to light at the due diligence stage when all documents are thoroughly inspected.
The most frequent time delaying issues are regarding the property or the lease negotiations.
What Type Of Deal Structures Are Available On The Market?
We are experts in the buying and selling of dental practices and we will help all dentists to structure a deal to suit them.
Each dentist has specific expectations, tax situations and desires.
Payments usually take the form of upfront transfer on completion for NHS-driven profits, deferred payments for performance-based criteria, earn-out for private revenue, and negotiated UDA rates for vendors working at the practice after completion, who may prefer to have a higher on-going salary rather than an upfront payment depending on their individual tax position.
Why Do Dentists Sell Their Dental Practices?
Investing in alternative businesses and retirement. The most common reasons for selling a dental practice are investing in alternative businesses, to add to a retirement fund or to gain freedom from all of the administration and regulations of running a practice, allowing the vendor to once again focus on the things they enjoy.
How Much Money Is Needed For Buying A Dental Practice?
You should always discuss your financial position with an expert broker and usually have at least a 10% deposit when thinking of buying a practice.
Most lenders will offer a maximum of £500,000 unsecured loan per dentist, depending on the practice and personal situation so if you are thinking of buying a practice worth £1,500,000 with a partner, you must have a minimum of £500,000 deposit.
If you place an offer and don’t have available funds or a finance agreement already in place, you risk being unable to buy a practice and, of course, losing credibility in the dental world, where news travels at the speed of light.
Who Is Selling And Their Reasons For Selling?
More often than not we come across sellers wishing to take the practice to the next level with a new buyer, whilst relinquishing the responsibility of running the practice, as they have done this for many years.
Having a seller deciding to stay at the practice to help with the transaction time is most valuable for any buyer, especially a young dentist buying a practice for a long-term project.
So, have a good conversation with the seller and explain your idea, as money is not the only driver for a seller.
Why Should I Check The CQC Inspection Report?
Once your offer is accepted and you are in the process of the due diligence, check the quality of the equipment, cabinetry, compressors, floor or anything that could perhaps cost you money from day one.
You also need to ask the details and date of the last CQC inspection and DDA compliance to make sure that any potential requests outlined in the report have been satisfactorily covered. Your solicitor will help you with checking all equipment certificates, as well as indemnity insurance for the staff.
What If The Seller Is Becoming An Associate?
The seller may wish to stay at the practice for a number of years. Make sure you discuss and agree on an associate contract with the seller and agree on the number of UDAs to be performed, pay per UDA and working hours.
Of course, if the seller is not staying at the practice, make sure that there are some restrictive covenants preventing the seller to work near the practice that you have just bought.
A minimum of 2.5 miles in a rural area and 0.5 miles in a city should apply.
What If I Wish To Buy The Property?
For a vendor, the options are either selling the property or have a lease in place with the buyer.
The property will be valued as a commercial property and not on a residential basis so this is a point to consider when thinking about buying it or not.
What If There Is A Lease On The Property?
If there is a lease on the property and the lease is less than 15 years to the expiry date, it is advisable to talk to the landlord about a potential extension and engage the landlord at an early stage.
Any buyer would want at least 15 years lease or more if possible and the likelihood is that the landlord would ask for his legal costs to be covered.
Do I Need To Have All My Certificates Ready And Available?
During the due diligence process, you will be asked to provide and show your certificates such as the GDC registration.
Have all those ready and will save you time and during the selling process.
Do I Need To Ask For An Inventory?
Yes most certainly so, it takes some time and is boring but it will create clarity with regards to the items purchased at the practice and the items that are taking away. Also it will avoid any potential arguments and dispute further down the dental practice sales process.
Will The Dental Practice Sales Process Trigger A New CQC Inspection?
Care Quality Commission is another potential reason for a delay in buying a dental practice. Sometimes even 3 months delays if either the buyer or the seller don’t have their DBS check ready and available to submit, or the practice has not been inspected lately.
The process of selling the dental practice will involve deregistration of the seller and registration of the buyer to work at the practice. This process will likely trigger a new CQC inspection, unless one was carried out recently. So, have everything ready and DBS not older than 6 months.
What Happens To The Equipment Still Leased?
If all, or part, of your equipment is leased, sellers could either transfer the arrangements to the buyer or pay it off, which is usually most buyers’ preferred choice.
What Are The Legal Warranties?
Most solicitors acting on behalf of their clients as buyers will advise their client to include in the Standard Purchase Agreement ( SPA ) document, a warrant from you as a seller that all information provided including any financial and contractual aspect of the practice is true and accurate.
On the other hand, the seller’s solicitors should negotiate and deal with the warranties in a way that protects the vendor and minimise their risks against potential claims in the future.
You can find out more about legal issues when buying a dental practice here.
What is a deferred payment structure?
When buying or selling a dental practice, a deferred payment deal is one where part of the agreed-upon price of the practice is withheld and paid over a series of months or years.
These deferred payments are often tied to the performance of the practice. In other words, if the practice underperforms in certain key areas, some of the deferred payment is reduced.
Buying a Dental Practice: Get Started
When buying a dental practice (especially if it’s for the first time), you need the competent hands of qualified professionals. Not only have we been helping the UK’s dentists to buy, start and sell dental practices for over 20 years, we are dental practice owners ourselves! We know what it takes to buy the right dental practice, we can help you find it, buy it and get it up and running.
Book a free, no-obligation consultation with one of our team at a time that suits you (including evenings). We’ll call you back and have a chat about how we can help buy your dream practice.
With Samera Business Advisors you can rest easy knowing that your investment is secure and your future is brighter. Contact us today so we can help plan for your tomorrow.
Learn More: Buying a Dental Practice
For more information please check out the articles and webinars in the buying a dental practice section of our Learning Centre like the Guide to Buying a Dental Practice.
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