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MediEstates - How working with an agent can ensure you achieve the best deal structure
How working with an agent can ensure you achieve the best deal structure

How working with an agent can ensure you achieve the best deal structure

 

When you consider selling your practice, direct approaches from fellow dentists and corporates can be very appealing. After all, a letter through the door from one of these interested parties indicates that there is grounded interest in your practice already, meaning that the selling process has the opportunity to be straightforward and less stressful.

 

But are you potentially limiting the value you can receive for your practice? What about the post-sale requirements being offered? These are important considerations, especially if you want to achieve sale terms that are in line with your future goals.

 

The risk of selling without an agent

 

When corporates or dentists approach you directly as a buyer, they will often have a set idea of what they think your practice is worth and a deal structure in mind that is most beneficial to them. Therefore, by only exploring this one avenue, you could be settling for less money and may even enter a deal structure that would not be in line with your future expectations.

 

For example, say a corporate has offered you a certain price for your practice. This price is likely calculated by what the corporate can afford to pay rather than what your practice is actually worth on the open market. The figure will also be based on their proposed operational structure post-sale, and as corporates utilise an associate-led model, this means that they may offer less than an independent dentist as they have to factor in their associate costs.

 

A buyer is also likely to offer a lower price if they aren’t aware of any direct competition. Consequently, the price you receive from a direct enquiry is rarely the maximum deal possible. By enlisting the help of a broker, you can attract other buyers and open up the competition.

 

What sort of deal structures are available?

 

Often when selling a practice, the principal dentist is expected to carry on working for a period of time post-sale to maintain the financial performance of the business and ease the transition for patients. For many dentists, the deal structure is almost more important than the sale price, especially as these terms will dictate how they work for the next few years and what this means for their earnings.

 

Deal structures come in many forms. You may be expected to work between 3 to 5 years in your practice and part of the sale price may be deferred and paid to you over this time as an incentive to optimise income. This deferral payment can be as much as 30% of the sale price. You must also consider the remuneration being offered to you post sale – while it may seem like the wise choice to take a higher remuneration rate, it may actually be beneficial to receive a more substantial lump sum at time of sale, as this is typically taxed less and can save you more.

 

By enlisting the help of an independent broker during the sale, they can ensure that various deal structures are on the table and negotiate the one most suited to your requirements.

 

Supporting your practice sale

 

Ultimately, the services of an independent broker are beneficial for numerous reasons. They not only attract more interested buyers for your practice, but can also help you to achieve a higher sale price and negotiate the most suitable deal structure. The team at MediEstates has years of experience supporting principal dentists with practice sales and works closely with you throughout the process. When you make the big decision to sell, they can help you achieve the best deal for you.

 

 

For more information, contact us on 01332 609318 to discuss your options.

 

 

Posted by: Alison Bates on

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 2018. 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.
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