BUYING OR SELLING A PRACTICE – SPECIALIST ADVICE
Article in PPD May 2012
Frank Taylor and Associates is the UK’s leading sales and valuation specialists. Here, the firm’s director Andy Acton gives some pointers to potential buyers and sellers.
Using our extensive range of services we have helped thousands of clients in the dental business arena – from our benchmark practice valuation report and impressive track record for achieving practice sales in different economic conditions, through to hands-on practice development programmes to improve practice performance.
Our team consists of experienced consultants who have a deep knowledge and understanding of the business of dentistry. With this team we are able to provide and deliver ethical, professional, confidential and independent support to you in everything we do.
A business should always be ready for a sale, a dental practice should be managed in a way that it is attractive to potential buyers and easy to sell. While some dentists feel that goodwill is more personal than actual, the majority of patients do stay with a practice through a change of ownership – this can be harsh on some dentists but life does go on. An easy way to improve values is to bring in a hygienist , which boosts profitability and leads to the principal(s)doing more dentistry. Factors which are currently attractive to purchasers include good NHS contracts, although location is still the biggest factor. The majority of buyers don’t want to relocate and therefore valuations for practices in areas which are popular to live in will always stay high. If buyers are prepared to look at other areas of the country, however, there are great deals to be had in rural areas, Cornwall and East Anglia, among others.
Of the approximately 3,100 interested parties which FTA has on our books, around 1,400 (almost half) have expressed an interest in mixed income practices in Hertfordshire.
Most vendors believe the hard bit is actually finding a buyer, but in the current climate managing the sale from that point is not always easy. When a handshake takes place, there’s still four to five months work to do, involving lawyers, accountants, the CQC, the PCT (if doing NHS work) and the bank. This part of the sale is underestimated by both buyers and sellers.
Most buyers look at profitable practices and aren’t keen on businesses which are in distress or which might need building. But for those with business acumen these represent the best opportunity for growth. Those practices which are already operating well will provide a steady income, but will require work to stay at that level and looking for areas to grow could prove challenging.
In today’s market, buyers need to speak to the bank or a broker early on to get a firm
idea of what they can borrow. Individuals are assess more closely and will almost always need a significant deposit. In contrast from fairly recent times banks are now assessing purchasers closely and looking for those with business experience. Buyers looking to push their case should be able to show that they’ve taken an interest or role in the running of practices which they may have worked at previously, or show education which has been undertaken in the form of courses or seminars.
Another option is for a buyer to pair up, either with a peer or mentor, to draw on combined experiences and knowledge. Potential buyers are encouraged to ask questions. From looking at the accounts, staff costs and net profits, buyers will build an understanding of the practice they’re looking at. We give buyers a hard time – as we value our integrity and want to ensure the sale goes through. A successful sale may also see today’s buyer looking to buy again or sell in the future.
Andy Acton is a director and co-owner of Frank Taylor and Associates – the leading independent valuers and sales agent to the dental profession.
Contact Frank Taylor and Associates on 0845 612 3434 or visit www.ft-associates.com