With the value of goodwill at a consistently healthy level, you may as a practice owner be considering your future options. Here are a number of points you should consider:
- Plan in advance – it can be daunting when we speak to principals who have booked their round the world cruise before even getting the practice valued. Succession planning is vital and ideally you should be considering your options at least three years in advance.
- Always get a valuation – even if you are approached privately – do not accept any offers until you know what your practice is really worth by having an independent valuation. Many principals are amazed how much their practice would attract on the open market. Likewise, if you have agreed to sell to an associate, don’t underestimate the time and skill it takes and employ a reputable agent to act on your behalf.
- Choose the right agent – some agents are contracted to work for the seller but are paid by the purchaser. We believe this can only produce a conflict, and remember there is no such thing as a free lunch!
- Use the open market to your advantage and ensure the agent you have chosen will take your practice to the full open market, not just to a group of preferred purchasers.
- Once you have a buyer, don’t lose motivation. It is vital to keep the turnover up as any buyer will be looking at your figures all the way through the sale process, and in some cases have demanded a reduction in the sale price to reflect the drop in turnover.
- It’s currently a seller’s market, why? Because we have just under 4,000 dentists looking to buy practices in England or Wales and we know they are not just looking, but have a genuine interest and sufficient access to funds. And with 12 banks lending to dentists, the funds are definitely available.
- Corporates and mini corporates are active in the market place and approaching many principals directly. Whilst it is flattering to have been contacted and it is always worth considering an offer, never say yes until an agent is involved as you may be underselling and tying yourself into earn outs and targets that could be avoided. And, remember corporates do this for a living and frequently the original offer does not resemble the final offer on the table. So if you do go for a private sale, protect you self by employing a dental agent – we deal with a high percentage of private sales and at a reduced commission fee are worth it!
- Are the premises freehold or leasehold? If they are leasehold make sure there are at least ten years left to run. If not, then renegotiate the lease and aim for at least 15 years. If you want to sell the freehold arrange for a commercial valuation.
- If you own the freehold you need to talk to us about the Capital Allowances – you may be pleasantly surprised by what we have to say!
- We are seeing many principals wanting to stay on and work as an Associate. Consider your future options – if you want to stay on at the practice, how many days will you want to work? What fee you will want to charge?
To talk through any of the above in more detail with one of our team, give us a call on 0845 612 3434.
This article was published in full in Dentistry Magazine, May 2014. To see the published article, please click here.
