5/3/2016 | Dental Practices

Relationships matter

Simon Hughes, Managing Director - Medical at Christie & Co considers the issues involved in selling a private dental practice.

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There are huge differences between selling a private practice and one in the NHS space.

Overall, it is generally much easier to complete the sale of a private practice.  Without the complications of the NHS partnership ramifications, the sale process is smoother and can be completed much more speedily  and returns on investment can be  higher. As a result, private practices are highly sought after, and increasingly so as the NHS market overheats.

When selling a private practice however, be prepared for a buyer to be much more sensitive to the transition of a patient list from one owner to the next. The relationship between a dentist and patient is a unique one, and protecting goodwill is critical to maximising value for the seller. 

So what mechanisms are used to help protect this goodwill and the buyer's investment?

Potential buyers of a private practice will generally request a tie-in period where the existing dentist remains with the practice for anything from six months to five years to ensure a good handover. It often suits the outgoing Principal’s circumstances to continue working, often on reduced hours. Much also depends on the amount of income you are generating as a working Principal. The more it is, the higher the risk for a buyer and the longer you are likely to be asked to tie-in for.

It is common in the sale of private dental practices for a percentage of the sale price to be deferred, sometimes over a number of years and sometimes linked to the performance of the practice or retained Principal. Negotiating such terms is a highly sensitive and specialist area and the devil is in the detail. Always make sure that you work with a suitably experienced and qualified selling agent who has your interests at heart.