Dental Elite’s Luke Moore: Due Diligence
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Dental Elite’s Luke Moore: The Do’s and Don’ts of Due Diligence
The due diligence process is one of the most important aspects of buying a dental practice. It is important to understand exactly what you are buying, and you will want to look into every possible detail. Don’t go it alone! Ensure that you work with a solicitor who has experience with the dental profession. Relying on them to show you what is important and what isn’t will make the journey much smoother.
The due diligence process will involve looking at patient records and activity status, i.e., the frequency that patients visit, their last visit, and treatments carried out. This will provide an idea of the stability of the practice patient base. You also need to look at the equipment; has it been regularly serviced and are there service agreements in place that you will need to continue post-sale?
Don’t forget the team! Information about vaccinations, PAYE and NI, employment status, salaries and copies of contracts are integral to a good working practice. This is also your first step in getting to know the people who will be working for you in the near future.
You and your lender will need an in-depth look into the financial status of the practice, including the practice tax returns and at least three years of profit and loss statements, after which you will be able to assess how successful the practice is and whether it is a viable proposition.
You will also need to see proof of CQC registration, inspection reports, data protection registration, and policies plus copies of all insurances and details of any claims (historical or current).
The quality of the building itself is another important part of due diligence. You will want to see evidence of building regulations, asbestos reports, risk assessments, D1 certification, energy performance certificates, and details about how the practice is set up.
Buying a practice with a good reputation will be much smoother than taking on somewhere that needs building up, and if you’re buying shares of a Limited Company, you should consider any historical complaints against the company because they become your responsibility post-sale. The due diligence process of a Share purchase is greater than that of an Asset purchase as – with the latter, the buyer doesn’t take on any historical liability.
Your solicitor will work with you to ascertain any risks and whether the seller will need to issue warranties against them. If the practice you are buying has an NHS contract that you will become liable for this too. It is important to understand the details of this contract to ensure the correct assets and liabilities are transferred during the sale.
It is also advisable to receive not only the copy of the contract itself but also any variation notices or correspondence from the LAT to show you where the contract is at this moment in time.
Due diligence is a lengthy process that will benefit from the help of an experienced dental solicitor. The support you receive from your broker should also give you a personalised service, providing a helping hand through this entire process.
Our team at Dental Elite are specialists in dealing with every aspect of practice sales and purchases, and we are ready to offer an experienced hand to help smooth the transaction. For more information, visit www.dentalelite.co.uk, email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 01788 545 900