Don’t be defeated by dental due diligence!

When setting out to acquire a new dental practice, professionals must undertake sufficient due diligence checks to ensure that their clients know as much about their new property and business as possible – so that they may avoid, or appropriately manage, any problems they may encounter in the future.

Due diligence is typically a lengthy and detailed process, so is often split into more manageable sections – most of which will be carried out by a solicitor and other professional experts, though some can be undertaken by the buyer themselves.

Physical due diligence

As with any property purchase, it is vital that a surveyor is employed to assess whether the property is structurally sound. With a leasehold, a surveyor will also help ensure that any repair obligations have been met prior to completion.

Financial due diligence

Seeking legal advice is always worthwhile when purchasing a new property or business, but in this case, it is essential that an accountant with specialist knowledge of the dentistry is used. They will be able to examine the books and financial records of the practice, to ensure that it is financially viable moving forwards. They will also inspect the practice’s income, its overheads and consider any borrowing.

Business Potential

Undertaking a full assessment is also an important part of due diligence which a buyer should carry out. This should involve assessing the figures and profile of the practice, its prospects and the demographics of the area, to make sure it is a viable and sustainable investment, that it may be able to sustain and develop the business that a buyer may wish to undertake and that it will be in keeping with the type of practice that the buyer wishes to own.

The property

Like any other property or business acquisition, a buyer should carry out a number of searches – these are legal questionnaires that are sent to official bodies, such as the local authority, environmental agency, water and drainage companies. The responses given in these questionnaires provide critical information on many legal issues and will be required by any funder.

There are also, in addition to these searches, a number of standard, pre-contract enquiries that must be asked. These are often very technical and often require access to the title deeds. As such, these are carried out by a buyer’s solicitor.

The practice

Indeed, employing a dental solicitor in the acquisition of a dental practice is absolutely essential. Their expertise and insight will mean that the buyer receives an extensive examination of all important aspects of the dental practice. A good example would be in the case of inspection certificates for autoclaves, X-ray machines and other equipment. Of course, a dental solicitor will be sure to check these – but a solicitor who has no knowledge of dentistry’s requirements may miss these crucial documents.

A specialist dental lawyer, like those at Goodman Grant, will also ask for a complete inventory of equipment, as well as the regulatory inspection certificates for each item – such as compressors and x-ray equipment. They know that is crucial to obtain copies of policies and procedures, evidence and compliance of regulations such as CQC and HTM01-05 – including registration, inspection reports, action plans and all relevant correspondence.

If the practice has an NHS contract, the solicitors will consider the NHS contract and the UDA performance of the practice. Indeed, a thorough due diligence enquiry poses about 20 pages of questions with the majority – at least 80 per cent – being specific to the dental profession.

What the buyer can do

The buyer should take a proactive approach to the due diligence checks and take it upon themselves to investigate important areas of their prospective new practice. It is wise to examine the way patient records are maintained, making sure they are kept properly. Similarly, the records and x-rays should also be checked to confirm that there has been no clinical neglect and to prevent a buyer from inheriting any complaints or failed treatments.

It’s also a good idea to sit in the reception and simply observe how the practice is working. Consider the staff and the patients – judge the atmosphere. These things may not have any legal bearing, but can be as important as any legal due diligence carried out by the professionals, and give a far greater sense of the practice than the paperwork.

 

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