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Glossary of Terms

 

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Explore our Glossary for easy-to-understand definitions of all the key terms:

  • Reconstituted Net Profit (RNP)
    The net profit of a dental practice after adding back certain expenses that a new owner is unlikely to incur, such as personal expenses, depreciation, or non-recurring costs.
  • Associate Dentist
    A self-employed dentist who works within a dental practice but is not the owner. Associates typically earn a percentage of the revenue they generate.
  • Break Clause
    A provision in a contract/lease allowing either party to terminate the agreement early, provided specific conditions and notice periods are met.
  • CQC (Care Quality Commission)
    The independent regulator of health and social care in England. All dental practice owners must register with the CQC to legally operate.
  • Completion Date
    The date on which the sale of the dental practice is finalised, and ownership officially transfers to the buyer.
  • Corporate
    A company or group that owns and operates multiple dental practices under a centralised business structure.
  • Deferred Consideration
    A portion of the purchase price paid to the seller after completion, usually contingent on meeting specific performance targets.
  • Due Diligence
    A comprehensive appraisal undertaken by a prospective buyer to evaluate the assets, liabilities, financial performance, and overall condition of a dental practice before finalising the purchase.
  • EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation)
    A measure of a dental practice’s profitability, commonly used by buyers and lenders as a foundation to assess financial performance before adjustments (see RNP).
  • EPC Certificate
    An Energy Performance Certificate, a legal requirement when selling a dental practice. Without one, the practice cannot be marketed, and the sale cannot proceed. This applies to both freehold and leasehold premises and includes listed buildings.
  • Fixed Assets
    Assets owned by the practice, such as dental equipment, furniture, and fixtures, included in the sale.
  • Goodwill
    The intangible value of a dental practice, encompassing its reputation, patient base, location, and brand recognition.
  • Heads of Terms (HoTs)
    A non-binding document outlining the key terms and conditions agreed upon by both parties before drafting the formal sale agreement.
  • Holding Deposit
    A sum of money paid by the prospective buyer to the seller (or their agent) to demonstrate serious intent to purchase the practice and take it off the market and secure it during due diligence and final negotiations.
  • Letter of Authority (LOA)
    A document detailing the fundamental terms and conditions of a practice sale. The practice owner signs the LOA to confirm agreement for the sale to proceed.
  • Lock-In Period
    A specified period after the sale during which the seller agrees not to open or work in a competing practice within a defined geographic area within a certain time frame.
  • Management Information
    Data and reports providing insights into the operational, financial, and clinical performance of a dental practice.
  • NHS Contract Value
    The annual value of the NHS dental services contract held by the practice, which contributes to its overall revenue.
  • NHS Uplift
    An increase in the amount the NHS pays dentists for their services.
  • Practice Valuation
    The process of determining the financial value of a dental practice, considering factors such as EBITDA, goodwill, asset value, and market demand.
  • Restrictive Covenant
    A clause in the sale agreement preventing the seller from competing with the practice for a specified period and within a defined geographic area and certain time frame.
  • Retention Period
    The length of time the seller agrees to remain with the practice post-sale to ensure a smooth transition for patients and staff.
  • Sale and Purchase Agreement (SPA)
    The legally binding contract between the buyer and seller outlining the terms of the dental practice sale.
  • Solicitor
    A legal professional specialising in the legal aspects of buying and selling dental practices, including drafting and reviewing contracts.
  • Tenure
    The legal right or conditions under which land, property, or a business is held or occupied.
  • TUPE (Transfer of Undertakings Protection of Employment Regulations)
    Legislation protecting employees’ rights when a business is transferred to a new owner, ensuring their terms and conditions are maintained.
  • Turnover
    The total revenue generated by a dental practice over a specific period, typically a year.
  • Vendor
    The seller of a dental practice.
  • Working Capital
    The day-to-day operational liquidity available to a dental practice, including cash, accounts receivable, and short-term liabilities.
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