Maximising your return
Lucy Hennessy outlines some of the key steps you can take to ensure an efficient sale process.
Thinking about selling your dental practice? Selling a practice takes more time and involves more preparation than you would perhaps think, but planning ahead with the guidance of experienced experts (like the Thorntons Dental Team!) will ensure you maximise the return on your investment. This article summarises some of the key steps you can take to ensure an efficient sale process.
1 Your professional team
You should engage with a specialist dental accountant and lawyer as soon as possible in the sale process. A dental specialist will be able to give you an insight into common issues that can occur throughout a sale process (and help you navigate around these) and give you an idea of the type of documents and information you will be asked to provide to a prospective buyer.
2 Sales agents
Some practices are sold privately and off-market and if you are fortunate enough to have an existing associate who is keen to buy in then great! Most practices however are sold via specialist sales agents, who specialise in the sale of dental practices and have extensive networks of contacts you can benefit from. We would always recommend that you register with one of them for marketing your practice and ensuring you are attracting the best offers.
3 Heads of terms
Heads of Terms are a document that sets out the key commercial terms of the deal, so that all parties have clear expectations on the transaction specifics from the outset. Importantly from a seller’s perspective, they normally contain legally binding confidentiality provisions to ensure that any information you release to a buyer during the due diligence process is treated as confidential and cannot be disclosed by the buyer to any third parties, save in limited circumstances.
4 Due diligence
Due diligence is a vital part of any practice sale, and its importance is often underestimated by sellers. The due diligence process normally comprises a list of queries/requests for information provided by
a buyer’s solicitor – it covers things like financials, employees, pensions, regulatory compliance etc. and while it can take some time to work through, the more detailed and complete responses you can give the better. A well organised practice will sell much more easily and the sale process generally will progress much more efficiently if the due diligence responses can be provided in an orderly and efficient manner.
5 Business or share purchase agreement
This is the legal contract for the sale of the practice. The first draft of it is usually prepared by the buyer’s solicitor and, normally, it won’t be circulated unless and until the legal due diligence process is largely completed (which is why it is important for sellers to respond promptly!) Its purpose is essentially to allocate transaction risk, and it will go backwards and forwards between the parties’ solicitors until such time as it is in a form that is acceptable to both. Once agreed, it is time to complete the deal, sign the documents, receive payment and hand over keys – congratulations!
At Thorntons, we have a wide network of contacts within the dental sector in Scotland, from accountants to sales agents, and we would be happy to share these with you.
About the Author
Lucy Hennessy, Solicitor, Thorntons Law LLP
Email: lhennessy@thorntons-law.co.uk
Tel: 0330 2368647
If you are thinking of selling your dental practice, please give us a call on 03330 430350 and if you need any further persuasion, please see what some of our clients have said at www.thorntons-law.co.uk
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