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Home // Top Tips On Buying A Dental Practice

Imagine you have located your dream practice: your bank has agreed your funding; the vendor has accepted your offer. What next? Whilst there are many things to be considered, you want to know the key headline considerations up front:

  1. Firstly, obtain a copy of the exiting contract between the existing dental practitioners and NHS England. Your solicitor may request this as its contents will, to some extent dictate the structure of your new practice.
  2. Structure of the practice – considerations may revolve around whether the practice should be a limited liability or a partnership. The attractiveness of the corporate vehicle to operate your business still holds true today as when Mr. Salomon set the first precedent – A company is a separate legal entity from its shareholders. Absent fraud and wrongful trade in a company exists with its own identity separate from its shareholders. The beauty of the corporate structure lies in the tax advantages to be gained through utilising this model and good tax advice.
  3. Regulators Approvals – a preliminary step before any applications can be made to the CQC/LAT will be the requirement for a DRB check. Apply early. These can take anything up to two months (although the average could be two weeks). The forms are long and complex and require thinking. When you apply, always consider the new structure you have in mind (i.e. the practice is a partnership but you would like to apply for a limited company to be approved). Our experience shows that to depart from an existing and established structure at the time of purchase will cause delays.and may result in variations to the GMS/GDS contract that may not have been anticipated at the point of purchase.
  4. Disclosure Bundle – As part of the sale and purchase of a business, the vendor will prepare a ‘disclosure bundle’ of documents. These will be key documents recording the key commitments of the practice. As an example, a disclosure bundle will include copies of the GMS/GDS contract and resultant commitments, current in relation to the premises out of which the practice operates.(if for example they are on a lease – there may be planning consents/notices etc.).
  5. Sales contract – this will set out what you are buying, what has been disclosed to you as part of the due diligence exercise and any conditions which have to be met before completion takes place. Completion is that point at which you transfer your monies across to the vendor and in return, you become the new owner. Typical pre-completion conditions revolve around obtaining regulatory approvals.
  6. Non-compete clauses – These should be drafted carefully to ensure enforceability. The general legal position is that the courts do not stop people earning a living. That being said, some restrictions are acceptable. A provision which restricts the vendor from setting up a competing business within a ten mile radius for five years is simply not going to be enforceable. However if it is for two years and one mile it is more likely to be upheld.
  7. Good communication, observation and integration – the vendor will need to handle the discussions with the employees and inform them of the sale. Staff and patients may become worried about having new owners. To help provide confidence to both, the potential buyer should consider an overlap period.where the buyer stays in the surgery and gets to understand how the business runs and how staff operate. This demonstrates a commitment by the buyer through presence at the surgery and will aid the process of integration.
  8. Ask the buyers to write to patients before completion informing them it’s being transferred to a new dentist; keeping patients informed beforehand is important. It avoids any new surprises when they arrive for their next appointment.
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