How can associates compete with dental corporates looking to purchase a dental practice?

Ambitious dental associates may look to acquire a share in a practice, take over an existing practice or even set up their own practice from scratch. But, what is the right price to pay for this dream?

Dental practice valuations are highly topical at the moment due to ‘dental corporates’ offering to acquire dental businesses throughout the country, which, on the face of it, may appear attractive to retiring professionals. In many cases, an associate can simply not compete with the headline price being offered, but is selling to a corporate purchaser the only way?

Negotiations

Associates will generally require to obtain a funding facility, which can take some time, depending on the level of funding.  However, the sale process to an associate will often be a flexible, informal process, whereas the corporate sale process will normally be rigid, based on the purchaser’s model.

Associates should be aware that these corporate offers will have a number of conditions attached, and more often than not will include a deferred payment, depending on future results. Due to this, the principals are normally expected to continue to operate their patient lists under an associate contract, generating similar levels of income for the new corporate owner for typically a two to three-year period. An associate purchaser will often not make the same level of demands.

With this in mind, associates looking to acquire a practice should remember that the offers from corporate bodies do not need to be the starting point for their price negotiations, as in many cases the offers will not be comparable. In addition many sellers would prefer to sell to a person they know and trust, even if the price paid is lower than a corporate might pay.

EQ Healthcare has a vast amount of experience helping dentists turn their dreams into reality. We recently assisted two associates in securing over £1m of bank financing to acquire a local practice and took the client from the initial idea all the way through to a concluded practice purchase.

Our specialist dental team would be delighted to hear from you, so please contact Louise Grant – louise.grant@eqaccountants.co.uk (01382 312100) or Anna Coff – anna.coff@eqaccountants.co.uk  (01307 474274) for further information.