Once you know you have the financing in place to acquire a dental practice, 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.
Having a valuation carried out
The process of due diligence starts with the seller supplying all of the relevant information required to prove that the practice is viable. While this is happening, you should arrange to have the practice independently valued. This means that you have the peace of mind of knowing that the money you are paying is a good investment. Never just take a seller’s valuation at face value.
Having the right professionals in place
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?
“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.
Sign up for Setting up in Practice Bootcamp.
If you’re thinking about buying a dental practice, you can find out how at our online setting up in practice bootcamp.
Further Information on Buying a Dental Practice
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 nearly 20 years, we are dental practice owners ourselves!
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.
Find Out More
For more information please check out the articles and webinars in the buying a dental practice section of our Learning Center.