The UK dental market offers significant opportunities for both buyers and sellers. However, whether you’re buying or selling a dental practice, it’s crucial to be aware of the factors that can impact the transaction and the long-term success of the practice. Both parties must conduct due diligence to ensure the transition is smooth and the business remains profitable. Below are essential aspects to consider, focusing on what buyers should look out for and how sellers should prepare for a successful sale.

1. Turnover of Dentists and Staff

One of the key assets in any dental practice is its staff. High turnover of dentists and staff members before or after a sale can be a red flag for potential buyers. A stable and experienced team often translates to patient retention, which is crucial for maintaining revenue.

Buyers should ask:

• Have any key team members left recently?
• What is the staff retention rate over the last 3–5 years?
• Are there contracts in place with associates or are they planning to leave after the sale?
• What’s the overall morale and work culture like in the practice?

If turnover has been high, it’s worth investigating whether the changes are due to natural circumstances (e.g., retirement or relocation) or if it points to deeper issues like dissatisfaction with management or the working environment. Sellers should try to retain key staff to maintain business continuity during and after the sale.

2. Financial Health and Stability

A deep dive into the financial performance of the practice is essential for buyers. This will help uncover any significant changes in revenue, costs, or profit margins, and whether these are a result of genuine growth or due to the practice being “prepared for sale” through short-term cost-cutting measures.

Key financial aspects to review include:

• Turnover trends: Has the practice experienced consistent revenue over the last 3–5 years? Large fluctuations, particularly a sudden spike in revenue just before the sale, could indicate that the seller has ramped up efforts to make the practice look more attractive. This might not be sustainable in the long term.
• Profit margins: Are the margins steady, or have costs been temporarily reduced? If a practice has recently slashed its costs, you’ll need to verify if this is sustainable or merely an attempt to inflate short-term profitability.
• Patient list stability: How many active patients are there, and is this number increasing or declining? Patient churn can give you insight into the practice’s long-term viability.

Sellers should:

• Be transparent with their financials and avoid any drastic changes in the lead-up to a sale. Any sudden improvements in profitability will raise suspicion and could delay or derail a deal.

3. Patient Base and Contracts

Understanding the patient base and the type of services offered is essential. Practices with a loyal, well-established patient base tend to offer more stability than those that rely on transient or one-off patients.

Look into:

• Patient demographics: What type of patients does the practice serve (NHS, private, or a mix)? What are the trends in patient demographics, and are they in line with your business model?
• Treatment contracts: Does the practice have ongoing contracts with patients for treatments such as orthodontics or long-term restorative care? Practices with a high percentage of NHS contracts are subject to NHS regulations, which may affect profitability. Private practices may be less regulated but require a different approach to marketing and patient care.

4. Practice Location and Premises

Location can significantly impact the future growth of the practice. Ideally, the practice should be in an area with high footfall or an established reputation in the community. Premises ownership is another critical aspect, as lease agreements can sometimes be tricky.

Buyers should ask:

• Does the practice own its premises or lease them?
• If leasing, how long is left on the current lease, and is it renewable?
• Are there any local competitors that might impact your future patient acquisition strategy?

Sellers should:

• Ensure that all lease agreements are in order and communicate with landlords early in the sale process to avoid any complications.

5. Regulatory Compliance and CQC Registration

In the UK, dental practices must comply with regulations set by the Care Quality Commission (CQC). Buyers should ensure that the practice is fully compliant and that there are no pending investigations or warnings that could affect the sale.

Check for:

• The latest CQC inspection reports and compliance with health and safety standards.
• Any unresolved patient complaints or legal issues.
• Ongoing compliance with GDPR, especially regarding patient records.
• Any GDC notifiable events involving any clinician at the practice.
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Sellers should:

• Rectify any outstanding compliance issues before putting the practice on the market. This can expedite the sale process and enhance the practice’s appeal to buyers.

6. Equipment and Technology

The dental industry is becoming increasingly reliant on advanced equipment and technology. A well-equipped practice will attract more patients and offer more services. However, outdated equipment can be costly to replace and might deter potential buyers.

Consider:

• What equipment does the practice currently use, and is it up to date?
• How often has the equipment been maintained?
• Will any equipment leases or warranties transfer over to the new owner?
• Has there been investment in IOS and CBCT?

Sellers should:

• Invest in equipment maintenance and consider upgrading essential tools before the sale to increase the practice’s value.

7. Legal Structure and Sale Type

The legal structure of the practice, whether it’s a sole trader, partnership, or limited company, will affect the way the sale is handled. Practices are typically sold as either asset sales (where only the assets and goodwill are sold) or share sales (where the entire company is sold).

Buyers should seek legal advice on:

• The most tax-efficient way to purchase the practice.
• Potential liabilities that come with an asset or share sale.
• Ensuring that all contracts (such as staff, patient, and lease agreements) are transferable post-sale.

Sellers should:

• Ensure their legal structure is suitable for the sale and consult with accountants and solicitors to make the process as smooth as possible.

Conclusion

Whether you’re buying or selling a dental practice in the UK, attention to detail is essential. Buyers need to carefully review the practice’s financial health, staff stability, and patient base, while sellers should prepare their business thoroughly without making superficial changes that could raise red flags. A well-prepared practice will not only attract more buyers but also fetch a higher price, making the transaction smoother for both parties.

Conducting thorough due diligence and consulting with legal, financial, and dental advisors is critical to making an informed decision and ensuring the long-term success of the business post-sale.