For many dentists, a successful career culminates in the sale of a successful practice that has taken many years of hard work to create. A productive dental clinic can be a huge asset, but when it comes to selling a dental practice, it requires specialised knowledge.Most owners will sell their practice through a specialised agency or broker, but may entrust the family solicitor with handling the sale of the practice. Unfortunately, there are a number of hidden pitfalls when selling a dental practice, and which can incur additional costs.Being aware of and able to factor in these costs can make a tremendous difference to whether a sale proceeds smoothly, or if it falls through. This is where an experienced dental solicitor can help, guiding buyers and sellers through the entire transaction.
How can a Dental Solicitor Help Sellers Consider Additional Costs?
As the principal of your practice, you will know everything about it, so it is easy to assume you will be aware of all additional costs. However, many of these are not immediately obvious and may take time to identify, potentially delaying a sale if they are overlooked.
Is Your Property Leasehold?
If you own the freehold and are due to pay off the mortgage on completion of the sale, there is no need to do anything straightaway. The matter is more complex if you have a lease with less than 15 years remaining. In this case, your buyer will almost certainly request an extension or a new lease. This will require negotiations with your landlord and you will probably need to pay their legal costs. Or perhaps you are the landlord?
Do You Have a Partnership or Expense Share Agreement?
If you do, the terms of your agreement may require you to offer the practice to your partner before marketing it. A good dental solicitor can look over an agreement to determine these obligations.
Is Your Due Diligence Complete?
A buyer will need to know about maintenance agreements, compliance licences and NHS contract performance levels. There is a wealth of certificates that must be collected or renewed in order for a sale to proceed. Some, like an Energy Performance Certificate are very straightforward, but others are easily overlooked and will all add to the cost of selling a practice.
Asbestos survey which is carried out by a specialist company
Fire risk assessment which you may be able to complete yourself
PAT testing for all portable electrical equipment to ensure they are safe, as all damaged equipment will need to be removed
Testing for fixed electrical installations may also be required, as most will need to be tested every 7 years
Air conditioning inspection, as well as whether there is planning consent for the A/C
Leasing agreements for equipment which must be transferred or paid off at the completion of the sale
During a dental practice acquisition, your buyer’s solicitor will want you to warrant the information provided. This includes the sale and purchase agreements, equipment, staff and compliance, as well as other aspects of the business.
It is vital to choose dental solicitors who are experienced in negotiating these types of warranties so they can limit your exposure and minimise your risk.
Instruct Dental Industry Experts
Dental practice sales can be stressful, but Goodman Grant Solicitors aim to make this important transition as smooth as possible. With more than a quarter of a century of providing legal services to the dental industry, we are confident there is no-one with greater knowledge.