=
MediEstates - ASK ANNE: Potential pitfalls to avoid in a practice sale
ASK ANNE: Potential pitfalls to avoid in a practice sale


Potential pitfalls to avoid in a practice sale



Selling a practice is a big undertaking and one that takes time and patience. There are many things to consider and it’s therefore vital to leave yourself enough time to make your practice an attractive proposition and to complete all the tasks required when going through a sale. At MediEstates, our advice is to surround yourselves with trusted advisers who have good experience in the dental sector. We can offer such advice at every stage of the sales process and we use our experience to help our customers avoid these eight potential pitfalls:

1. Check your lease agreement with your landlord


If you have a lease agreement, you will need to liaise with the landlord about having the lease taken over by the buyer. It’s important to study your lease agreement as early as possible and MediEstates can help with this to ensure you identify and resolve any problems ahead of the sale.

2. If you have an NHS contract, ensure you are hitting your targets


Any potential purchaser of your business will want to be sure that it is meeting its NHS contract. Underperformance will be a red flag to a buyer, who may be concerned about underlying inefficiencies. If you’re struggling to hit targets the recruitment team at MediCruit can help to find locum cover so you can fill gaps in your appointment book.

3. Make sure you can satisfy the Care Quality Commission (CQC)


This is potentially the most complicated part of a practice sale. Firstly, you need to make sure that your practice is correctly registered and if not, you should rectify this as quickly as possible.
When selling a practice, the practice owner usually has to apply to enter a partnership with the incoming buyer. It is crucial that the application form is completed correctly first time as it will be rejected if a mistake is discovered. Timing your application is also critical and our team can help in this respect as, whilst you don’t want to be too late, you also don’t want to be too early; if your application is accepted by the CQC but isn’t invoked for an extended period of time, they may inform you it’s no longer valid and you will have to apply again.

4. Put your business contracts in order


Before you even get a valuation of your practice, it is important to check all your contracts. Many owners may have informal verbal agreements with their staff and it’s crucial to get formal contracts in place so that the buyer can understand their obligations and an accurate valuation of the practice can be made.
If you need guidance regarding contracts, or have concerns about your running costs, you can speak to a member of our expert team.

5. Be prepared for the buyer’s bank valuation


We advise buyers to start getting indicative terms from their lender as early as possible and part of that process is the practice valuation. It’s important that the valuation is as accurate as possible and completed by experienced valuers who know the market. At MediEstates, we regularly analyse the market to make sure our valuations are in line with market trends and current bank valuations.

6. Choose the right professionals


Choosing an experienced and proactive dental solicitor is crucial to an expedient practice sale. They need to understand NHS dental contracts, know about the CQC and be easy to communicate with to keep the transaction moving forward. At MediEstates we have a panel of specialist solicitors who are experienced in dental transactions and we are happy to recommend from this list.

7. Be prepared for indemnities, warranties and redemption requests


It is standard for buyers to request that a number of indemnities and warranties are written into the contract when negotiating the terms of a sale. An example of which might be to cover the buyer in case of any claims for defective work completed by the vendor or to cover failure of any equipment. It may also include an undertaking that the seller will not work within a certain radius of the practice for a number of months. Or conversely, that the seller remains working in the practice for a period of time following the sale. Often, the biggest surprise for vendors is the request that an amount of money, typically 10 per cent of the purchase price, is held in reserve for a period of time. This happens most commonly when there is a certain amount of private income expected, but not guaranteed. It is important for vendors to be prepared for such a request.

8. Have all your paperwork ready for due diligence


And finally, it’s the responsibility of the vendor to have all their paperwork and information in relation to the business ready for inspection by the buyer’s solicitor. We always encourage vendors to put aside some dedicated time in order to complete the paperwork with as few delays as possible. The more prepared you are, the easier it will be.

There’s a lot involved in selling a practice and we consider it to be an important part of our role to use our extensive experience to help relieve the pressure and stress at every stage of the sales process.
Posted by: Anne Barker on 30 May 2018

General Buyer Terms 

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 1998. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
Your shortlist contents will be included in this contact submission