Top 5 Legal Tips When Selling Your Dental Practice16/04/19
Our specialist dental lawyers have put together their top five tips for you to consider when selling your dental practice.
You need to be prepared in advance so that when the transaction starts, you are fully geared up for the sale to ensure it takes place as quickly and efficiently as possible.
Top Tip 1: Engage your professional team early on
Engage your professional team at an early stage. Your professional team should be experts in the dental market who deal with dental transactions on a daily basis. A dental sale is not the same as any other business sale, as you will have to deal with the nuances of your CQC Registration and the transfer of your NHS Contract. Therefore it is important that you instruct not only dental specialist solicitors who are well versed in dealing with dental practice sales but also bringing on board a specialist dental agent or valuer who knows and understand the dental market.
Top Tip 2: Gather information early to avoid due diligence delays
Irrelevant of whom you are selling to, whether it is your associate or a buyer through your agent, every Buyer will want to conduct a full and thorough due diligence exercise. The due diligence process can delay a transaction if you have not collated key information about your practice in an efficient manner and submitted it to the Buyer. Therefore, you should ideally start to gather standard information as soon as you accept an offer for your practice. Most dental agents now have standard lists that they can provide you with which will enable you to start collating documents from the outset. Any delays in providing the due diligence documents to the Buyer will only disadvantage you and impede the sale as a prudent Buyer will want to go into the purchase with their eyes open and see everything to do with the practice.
Top Tip 3: Consider the influence of external bodies
The timescale of a dental transaction will be influenced by external bodies.
Firstly, whilst you will be registered with the CQC, it will be necessary for the Buyer to apply for their own CQC registration for the practice. If you are selling a mixed practice (i.e. there is an NHS Contract to transfer), NHS England will want sight or confirmation of a partnership CQC registration. In this scenario, you and the Buyer will need to apply jointly to the CQC. You will both also need up to date DBS checks which have been counter signed by the CQC. Currently, it takes between 4-6 weeks to obtain a DBS check and between 8-10 weeks for the CQC to process an application.
Secondly, if there is a NHS Contract to transfer to the Buyer, you and the Buyer will need to enter into a temporary partnership to facilitate this. Make sure that your “house is in order” so that you are on track with your UDAs, and that you have complied fully with the terms of your NHS Contract, otherwise this may cause issues later down the line.
Top Tip 4: Prepare your property arrangements
As well as selling the business, you will either want to sell the freehold property (if you own it) or assign your existing lease to the Buyer. If the existing lease is nearing its expiration date, you will want to seek an extension to it or ask for permission for a new lease to be granted to the Buyer. In any of these scenarios, the Buyer will need funding from a lender who will want to take security over the freehold property or the lease.
It is usually the case that lenders require a term of 10 years or more remaining on a lease. With that in mind, you may wish to engage with your landlord at an early stage about your intention to sell the practice and ascertain their requirements if an extension or grant of a new lease is required. Having a third party landlord involved in the transaction can cause delays so you need to factor this into the timescale.
Top Tip 5: Plan for your future
We usually advise that a dental transaction (without any major hiccups!) takes between 6 to 9 months (this factors in the requirements of the external bodies above). Therefore, it is best to start your sale and retirement planning early. Depending on your plans for after the sale, if you wish to stay on at the practice as an Associate, it is a good idea to include this as a condition for completion in the Heads of Terms and Sale Agreement. The Sale Agreement should also append a copy of your agreed Associate Agreement.
Capsticks' Legal Services for Dentists
If you would like to discuss your dental practice sale then please don’t hesitate to get in touch with our specialist dental lawyers Puja Solanki and Neha Shah. Learn more about Capsticks' legal services for dentists here.