Here, Paul Harris, director at Goodman Grant Solicitors, discusses how hard it can be to predict how long a practice sale or acquisition will take…
Without fail, one of the questions I am asked by dentists when they first start on their journey of buying or selling a dental practice is: “How long will the transaction take from start to finish?”
This is a question that always invokes a sense of dread for myself and my colleagues. If we provide an optimistic timescale, it may be enough to win over a potential client at the outset, but you can rest assured that it will always come back to bite you later down the line. The alternative option is to provide a more realistic timescale – or even to overestimate a little – and take the hit at the start. Hopefully, when the transaction completes on time, or earlier than expected, you will end up with a happy client at the conclusion of the deal.
From our perspective, it’s a daunting balancing act between making a positive or negative impression at the start of the process and again at its end.
It wouldn’t be inaccurate to say that approximately 90 per cent of the time, we are contacted by dentists who are buying for the first time, or by sellers who bought their practices over 10 years ago, when the dental landscape was far more easily traversed than it is today. The reason this is worth mentioning is because when we are first approached by these types of clients, they often have no idea what to expect in terms of timescales; as such, it is very important for us to manage expectations from the very beginning. In truth, it’s understandable why any potential buyer or seller would want or need to know how long the process might take. There are many considerations for them to take into account, after all. They may have to deal with financial planning, serving notice on a current employer, arranging logistical arrangements, planning holidays or other personal engagements – the list is almost endless.
As such, whenever I get asked that inevitable question, I tend to answer with: “Every transaction is different and it will really depend on the following…”
Is the property leasehold or freehold?
Obviously, a dentist can purchase a practice on a freehold or leasehold basis. While there are many considerations when buying a freehold property, these are generally quite straightforward. With a leasehold, it’s important to know precisely what you are agreeing to, what liabilities you have and who is responsible for upkeep and maintenance – you or the landlord. As such, leasehold agreements can be quite complicated and time-consuming to complete.
What type of practice is it?
Depending on whether the practice is NHS or private, or if it has been incorporated or not, there are many different considerations to take into account. It’s nigh impossible to predict how long each of these different stages might take – approval from the LAT, CQC applications, financial checks – which means it can be incredibly difficult to suggest an accurate timescale.
Who are the solicitors acting for the other party?
No matter how closely your own solicitor is trying to work to a carefully planned timescale, there is absolutely no guarantee that the other party is doing the same. In these cases, there’s ultimately nothing you can do but wait for the other side to catch up.
Who will be dealing with the CQC application?
It goes without saying that CQC applications can greatly impact the time it takes to complete a sale or purchase. The application itself is something of a bureaucratic nightmare for most people, and it must be timed to perfection in order to be accepted. For example, if you apply too early, the CQC will simply reject the application – too late, and the completion date will be pushed back. While you may want to complete the application yourself – and feel you are quite capable of doing so – it is always worth contacting your solicitor for advice and support, in order to avoid any unnecessary delays.
Have the Heads of Terms been agreed between the parties?
If they have – great! If they haven’t, this could be a long and frustrating process while you both negotiate on what you want. Equally, this could take no time at all, or it could be a long, drawn out process that seems to have no end. Pinning down an exact time is difficult and depends almost entirely on who is on either side.
Is the buyer a current associate at the practice?
If they are, it may help expedite the process – since they will be working with a colleague with whom they have spent a great deal of time with. You can hope that this will be an amicable and straightforward deal… but that’s not always the case! If the buyer is a newcomer, there could be no problems, or a surfeit of them.
The best approach is to simply accept that there is no concrete answer. It really is like asking how long a piece of string is. Nevertheless, the team at Goodman Grant will be happy to go through each individual factor and help ascertain a likely timescale for your proposed transaction.