Case study

Selling a dental practice to an associate

A seamless transition for patients and staff


Practice sale

PFM dealt with from start to finish

Fixed fee

for legals

Finance

negotiated for the buyer by us

Like many practice owners, when Matthew decided to sell up, he wanted the very best transition for his staff, patients and business. That’s why he decided to give his associate first refusal.

What did we do?

Matthew planned to sell his practice to capitalise on current strong goodwill values.

Matthew opted for our full associate service, which means we take care of the sale, while seller and buyer carry on with their everyday relationship.

Here’s how the process worked for Matthew - and associate Ciaran.

Fair valuation

Just as we would with any sale, we started with a fair and achievable valuation of the practice. At this point, the pair could have used the report as the basis for their own negotiations but Matthew chose our full service, where we deal with the sale for him.

Why opt for the full service?

Instructing PFM to look after the sale basically means the seller gets all the benefits of our agency support, without us marketing the practice to our buyers. Here are the advantages:

  • We prepare a full prospectus, just as if the practice was going on the open market
  • We do the negotiations, leaving the principal to continue their normal day to day relationship with the purchaser
  • Our market-ready prospectus enables us to name a deadline for first refusal - creating a strong negotiating position
  • We check and qualify that finance is in place - and we can help the associate with raising the finance (a win-win because we know it’s done properly and on time)
  • We project manage the sale, making sure everything is on schedule, including finance, legal work, valuations and the CQC application. This means a quicker, smoother sale
  • We charge a reduced agency fee because we’re not marketing the business. (It’s 1.5% plus VAT of the sale price, rather than the normal 2.5% plus VAT)

PFM’s full service provided peace of mind, removing potential headaches knowing the sale would be project managed from start to finish and all necessary requirements would be met.

— Matthew Russell, retired practice owner, Stockport

Over to in-house legal experts

Of course, if you want to work with your own solicitors, we’re happy to liaise with them but Matthew liked the idea that he could use our in-house team - and for a fixed fee.

Working with our own colleagues generally makes it an easier process for everyone. As usual, we had regular updates with the legal teams, so we were always up to date and able to resolve any problems quickly.

Our legal team can’t represent both buyer and seller so we referred Ciaran to another specialist dental solicitor.

Using the in-house legal team was an added bonus, their excellent, knowledgeable and responsive service kept the sale on schedule

— Matthew Russell, retired practice owner, Stockport

What about the practice sale proceeds?

Making a large investment can be a daunting prospect but at PFM we do this regularly.

Matthew was an existing financial services client, although we can, and often do, start a relationship for our wealth management for new clients too.

A carefully-crafted portfolio will use a variety of tax wrappers - ways of allowing income to be taken tax-efficiently.

Finance negotiations

Ciaran definitely wanted to buy the practice but had not been in touch with any banks. We offer finance negotiations for purchasers and Ciaran was pleased for us to take this on.

As you’ll know from every contact you’ve had with an independent financial advisor, everything starts by pulling together the relevant information. For buying a dental practice that means:

  • the purchaser (experience, assets, liabilities, income and expenditures)
  • the practice (breakdown of income, accounting information)
  • projections of how the practice will work under the new owner (which could be very different to the vendor).

We put together a report and sent it to several healthcare specialist banks. From there, we negotiated rates and terms. Once we’d compiled the best set of offers, we forwarded them to Ciaran, so he could choose the one that suited him.

PFM took the stress away from me having to approach individual banks to obtain finance and were able to arrange the necessary insurance which was one less thing to worry about.

— Ciaran Burke, dental practice owner, Stockport

Bank valuation

Naturally, before the bank can finalise the finance, they need their own valuation of the business and property. We set the ball rolling on this and as valuers ourselves, we pride ourselves on providing a good set of details to help the valuer do an accurate job.

In Ciaran’s case, we had a great ‘valuer to valuer’ conversation,- so we knew they understood the practice inside out. Getting the necessary finance depends on the valuation so it’s in everyone’s interests to get it right.

How long did the sale take?

Sales can sometimes hit a few bumps along the way but Matthew and Ciaran’s was pretty smooth sailing. We made sure everything was complete at the right time, so from start to finish, the whole process took five months - the quickest it can be done.

The basic process is

  • One month for DBS check
  • Three months for CQC
  • One month to serve notice to the NHS

Alongside, the finance process includes

  • Two weeks for an agreement in principle
  • A further four weeks for a credit decision
  • A further six weeks to get the valuation done and sent back
  • A further two weeks for the final credit-backed decision, taking the valuation into account

After this 14 week process, the bank then needs to provide its instruction to the purchaser’s lawyers.

How was it for the buyer?

Instructing us to handle the sale isn’t just good for the seller. There are lots of advantages for the buyer too, who

  • Has an experienced sales agent to turn to with any questions
  • Can opt for us to undertake the finance negotiations on their behalf
  • Can ask our accountancy team to put the projections in place - we’re recognised to do this by several banks
  • Can ask us to organise the insurances (life cover, income protection and surgery insurance)
  • Can rely on our experience to guide them - so they’re aware of what to do and when.

Congratulations to both Matthew and Ciaran on a great sale. And with accounts and wealth management also part of the PFM family, we hope we’ll be working with them again in the future.

Would you like to know more?

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Having spent years building the practice, it was important to us we found someone to take good care of our team and patients. PFM Dental took the time to understand who we were looking for and helped us market accordingly.

— Mark Woodger, former practice owner, Birchwood, Warrington