You have almost reached the end of your journey to buying or selling a dental practice. It is at this stage that payment for the practice has been made and you are looking forward to celebrating the completion of the transaction. However, in all the excitement, it is easy to forget that there are a whole host of post-completion tasks to address. This will involve co-ordinating with your solicitors and other relevant parties and authorities to ensure that the important post-completion paperwork is filed and no details have been overlooked. Listed below are some of the essential tasks that must be dealt with in order to fully conclude the transaction.
Buyers should handle the cancellation of the registration of the partnership between the seller and the buyer. It is also essential for the buyer to register as the new provider and registered manager of the practice with CQC, following the retirement of the seller. The timescale of this process can take up to two months after completion of the transaction.
Notice of the seller’s intention to retire from the partnership must be served on the practice’s Local Area Team (LAT). Both parties need to ensure that a contract variation is prepared, executed and returned to the LAT in order to remove the seller from the GDS Contract (and, consequently, any liability for performance of the GDS Contract). The timescale of the process is usually dictated by the post-completion CQC registration timescales and is, therefore, usually finalised no sooner than two months after the date of completion.
If a new lease of the Property is granted to a buyer, it can take up to six months for the Land Registry to complete the registration process and for official copies of the new title to be issued. The registration of transfers of freehold estates and registrations of charges are much quicker, and usually complete within a few days of lodging the application for registration following the date of completion.
Stamp Duty on Shares
If the transaction was one of a sale of company shares, the buyer’s solicitor or accountant will need to arrange for Her Majesty’s Revenue and Customs (HMRC) to provisionally stamp the stock transfer forms, pending final completion accounts. Once these have been finalised, further assessments will need to be made to determine whether any other payments or rebates are due from or to HMRC in respect of stamp duty.
It is fairly common on dental transactions for some of the purchase monies to be retained in the solicitor’s client bank account, until a specific condition or event linked to the transaction has been finalised. Upon finalisation, the funds can either be released to the other party, used towards settling a balance owed to a third party, or – if there is a surplus of funds retained – returned to the party from whom the same was being retained. Timescales for this process usually range anywhere from a few months to a full calendar year following the date of completion. The most common types of retention include:
- Retention in respect of anticipated clawback for UDA underperformance by the seller in the previous contract year. In order to avoid the buyer being out of pocket in this case, it is common for the parties to agree for a portion of the purchase monies to be held back from the seller to cover the cost of the anticipated clawback.
- Defective work retention. If the practice carries out private work, it is advisable that the buyer seeks a retention to cover the cost of any remedial work that may be required in respect of potential defective dental work carried out by the seller.
- The seller’s associateship. Some buyers request that the seller stays on as an associate at the practice for a period of time so as to enable the buyer to build up good relationships with existing patients. It is common for buyers to request some of the purchase monies to be held back as surety for the seller to remain at the practice for a specified time. After the agreed period has passed, the retained funds will be released to the seller.
- Turnover targets. In private practices, buyers will often want reassurance that the turnover and profit projections are accurate and achievable. This reassurance can be given in the form of an agreement that a portion of the purchase monies will be retained until the end of year accounts have been finalised.
There are evidently several aspects of a dental practice transaction which require careful consideration and management post-completion. To ensure that you feel confident that your interests are protected, it is essential that you engage a reliable team of dento-legal solicitors who can help guide you through every stage of a dental transaction. Goodman Grant’s expertise will ensure that you are never left with any loose ends, liabilities, or out of pocket losses which could have otherwise been avoided.