Buying or selling a dental practice should be an exciting time for any dentist but all too often this excitement is overshadowed by delays in the transactional process. While unexpected delays can arise in any deal, which are out of all parties’ control, there are a number of things you can be doing if you are contemplating selling or buying a practice, which should help to keep you on track for a speedy completion:
The Care Quality Commission (CQC) is often cited as a chief cause of delays in a dental transaction but as long as you have factored the application process into your timescales, you should be able to manage this effectively.
Many dentists underestimate the amount of time it takes to apply to the CQC. Before you can even submit your application, you need to have obtained an enhanced DBS check (formerly known as a CRB check), which needs to have been counter-signed by the CQC. This can take around four weeks, so you need to make sure you have your up to date checks in good time and remember, they are only in date for six months.
Filling out your application also takes longer than some dentists anticipate. You will need to complete a statement of purpose and the CQC suggests setting aside a full day to complete the application. Practically, you should factor in a longer period than this, unless you can be sure you will not be distracted for any great length of time while completing your statement of purpose. The CQC’s website contains some useful guidance and templates to assist with drafting your statement of purpose.
Once your application has been submitted, then, assuming it has been completed correctly and there is no missing information, you can expect the application process to take around two to three months.
2. Due diligence
One of the first tasks in the legal process for a seller is to answer a list of questions about the practice, which the buyer’s solicitor will raise. You will have to run through these questions and provide copies of supporting documentation. This is known as the due diligence exercise and will enable the buyer to determine that the practice is worth what they have agreed to pay for it.
If your filing needs a little attention, then it is best to get on top of this before the due diligence process starts. Buyers’ questionnaires will raise extensive queries about the practice and they will expect you to have this information to hand in a user-friendly format. This all creates a good impression about the practice and will save the buyer having to probe further to elicit the necessary information, all of which causes delays.
When buying a practice, you need to ensure you have the necessary funding in place in good time for completion. Dentists have access to specialist healthcare teams in many of the major high-street lenders but more are now turning to secured lending (i.e. taking a charge over property or your life insurance policy to secure the loan).
Banks will have their own due diligence requirements and their solicitor will need to ensure all of the bank’s conditions precedent are satisfied before completion. Failure to provide the relevant information to your bank in a timely fashion does cause delays, so it pays to get your lender on board early in the process so your solicitor can check their requirements and address these.
The largest asset of any practice can often be the property from which it operates. Commercial property sales and purchases have their own requirements and there may even be a new lease to negotiate with the owner of the building. If you are selling a property as part of your transaction, you should ensure all of your paperwork is in order. Your solicitor should run through this with you but you can assist by making sure you have an energy performance certificate (EPC), an asbestos report, a fire safety risk assessment and information about any insurance claims.
5. Inspections, maintenance and legal requirements
Dentistry is a heavily regulated profession and navigating the minefield of Regulations can be daunting. Your surgery will no doubt include an x-ray, amalgam separator and autoclave and you need to ensure this equipment has been regularly inspected and maintained to a safe and hygienic standard and you have the paperwork to evidence this.
If your practice plays music or there is a television, check your PRS and television licences are current. You should also ensure medical requirements for your staff (such as hepatitis B vaccination details) are up to date and any policies for the surgery (health and safety policy, equal opportunities policy and data protection policy, for example) are in good order.
Dentists who are on top of these issues from the outset will find their transactions will progress much more smoothly and reduce overall stress, time and costs. The trick is to be organised with your paperwork and do your research beforehand. Our team of dental law experts can help and are always happy to have an initial conversation about your intentions if you are looking to sell or buy your next practice.
Andrew Darnton is an Associate Solicitor in the dental team at Crombie Wilkinson and can be contacted on firstname.lastname@example.org 01904 624 185.