How NOT to Buy a Dental Practice: Things to Avoid
Dentistry is all we do, so we see many examples of very organised sellers and buyers who make a transaction tick along very nicely. However, our experience also shows common issues which can severely throw a transaction off track! So if you are really not interested in buying or selling a dental practice either at all, or quickly, here are our top recommendations:-
- As a buyer or seller don’t use a dental specialist adviser. Specialist lawyers, accountants, financial advisers and sales agents are costly aren’t they? So better to use the family friend or high street adviser who will save thousands of pounds in fees notwithstanding the extra time they will take and their complete ignorance of how CQC and NHS England work. They will get there in the end – right?
- Leading on from this, as a buyer, don’t take advice early about the correct structure for the purchase. So, a good one is to start the buying process as a sole trader or partnership and then take advice at the last moment about buying through a limited company. This will cause many months of delay whilst your lending and CQC applications have to be amended as, someone, somewhere, has just realised it may be more advantageous to buy through a limited company.
- Also, as a buyer consider leaving your own survey of the Property until late into the transaction. Always good to deal with any condition or lack of repair issues just as exchange of contracts is about to occur. Don’t think about getting your own survey done “early doors” or at least as soon as possible after the lender’s valuation has come through. If leasehold, assume you are not responsible for any repairs or similar issues under your lease, you are a tenant and it is not your property – surely it is the landlord’s problem to sort out any maintenance repairs, asbestos risk assessments, fire safety issues etc. Further, don’t worry about taking advice early on regarding these issues on the assumption that they will not be your problem without checking the terms of your lease.
- As a seller ensure key documents are missing or have vanished into thin air. Useful documents to mislay to frustrate a sale include your original GDS or PDS Contract, variations thereto, contracts with key suppliers into the Practice. If the Property is leasehold, mislay the lease under which you occupy the premises and property related consents (planning, building regulations).
- As a seller don’t keep the Premises and Practice equipment maintained and compliant with statutory obligations. Common spanners thrown into the works under this heading include a failure to have an asbestos risk assessment or fire risk assessment in place, an in date electrical circuitry inspection report and maintenance records for X-ray machines, autoclaves and pressure vessels. Lack of these will involve lots of expense and time all at once to correct and allow the sale to move forward. As such please don’t be proactive and ensure these matters are all attended to before terms are agreed with a buyer.
- CQC – as a buyer don’t take advice about the best time to launch the CQC applications. Submitting too early means the CQC may threaten to refuse the applications due to the underlying transaction not being ready to complete. Submit too late and Completion is delayed whilst waiting for CQC to process. Admittedly a difficult balancing act to get right but failing to take any advice is guaranteed to throw the transaction off track.
- CQC – as a seller don’t even think about assisting the buyer with their CQC applications. As the person currently dealing with CQC compliance at the Practice, best not to pass any advice or documents on to the buyer to assist with the smooth process of their incoming applications. It’s the buyer’s responsibility to do all this – isn’t it?
As you will appreciate the above is not intended to be an all-inclusive list of the ways to derail a dental transaction, but it does attempt to set out some of the common derailing issues we see. If you are interested in discussing other ways to hamper a sale or purchase (or indeed ways to speed it up) please feel free to contact Stephen Knowles at Stephen@pfmlegal.co.uk or on 01904 521270
