Top tips for Dental Practice Buyers: What should you look out for?

Buying a dental practice can be an intimidating process — whether it’s your first acquisition or another step in building your dental group. There are countless factors that can influence the outcome of a purchase, but we have compiled a list of a few key things to bear in mind.

Assets or Shares?

Is the practice you’re buying incorporated?
If so, the seller will often prefer to sell their company shares rather than the business assets themselves.

This approach can make certain elements — such as the transfer of an NHS contract — more straightforward. However, purchasing shares also means you’ll be taking on all of the company’s existing debts and liabilities along with its assets.

We’ll work closely with your accountant to ensure the seller accounts for any such liabilities and that you’re fully protected against unforeseen issues after completion.

NHS Practices

It’s important to carefully review the NHS performance levels at the practice, particularly in relation to UDAs. Typically, the seller should compensate the buyer for any underperformance at completion.

While you might still have time to make up the shortfall before the contract year ends, responsibility for any clawback ultimately rests with you as the new contractor — even if the seller received the original payment from the BSA.

Additionally, you may need to pay associates to deliver those underperformed UDAs, usually 45–50% of the UDA value — despite the fact that the seller has already been paid in full but hasn’t completed the work. This effectively means you could be paying twice for the same units of activity.

Defective Treatment

You’ll also need to satisfy yourself that the clinical standards at the practice meet expectations. We’ll help by obtaining information on patient complaints, capitation schemes, and treatment history. Where appropriate, we may recommend seeking extra protection through indemnities — or even retaining part of the purchase price for a period of time.

This safeguard helps protect you from financial loss if issues surface after completion. However, if there are serious concerns about the practice’s clinical quality, it might be wiser to look elsewhere. We have strong relationships with leading dental brokers and can introduce you to alternative opportunities if needed.

Bank Loan

When arranging your funding, think carefully about the loan term and whether it aligns with both your personal and business plans. Check how long the bank’s offer will remain valid — some have short expiry periods, and missing the deadline could mean losing access to a preferential rate.

We work alongside a number of banks and specialist brokers who focus on dental practice finance, so get in touch if you’d like details or introductions.

CQC

If you’re purchasing an NHS practice in England, begin your CQC registration process as early as possible.
To transfer a GDS contract via the partnership route, both parties will need a CQC partnership registration, even if there’s no plan to run the practice as a partnership long-term. The CQC process can be lengthy — typically taking 16–20 weeks — and applications can’t be submitted until all parties have obtained a clear DBS check (which itself can take around 8 weeks).

Delaying your CQC application could set your transaction back by six months or more, so early preparation is key.

If you would like any advice or guidance about any of the topics raised int his blog, please feel free to get in touch here!