DTUK1410

May 24-30, 2010United Kingdom EditionCODEplan Tailor-made dental plans that tick all the boxes CODEplan for all dental practices For a free consultation to see how CODEplan dental plans could tick your boxes call 01409 255 551 or email info@CODEplan.co.uk visit CODEplan.co.uk ✓ Private and NHS dental practices ✔ Maintenance or care plans ✔ CAREXL plan for the best of maintenance and care ✔ Plans in a box for your instantdental plan ✔ FACEplan – the maintenance plan for medical skin treatments ✔ Extended Payment for your patients to spread the cost of treatments ✔ Low administration fees ✔ Optional dental accident and emergency insurance ✔ CODE management support ✔ Business strategy advice and team training ✔ Practice branding and marketing advice ✔ Free membership of CODE (with 350+ plan patients) ✔ Free Clinical Governance Made Simple subscription (with 500 + plan patients) ✔ Free Infection Prevention Kit (to comply with HTM 01 – 05) ✔ I t will not have escaped your attention that over the last couple of years the country has suffered something of an economic downturn. While some dental practices have been affected – some sig- nificantly, others less so – by and large the dental profession has escaped unscathed by the eco- nomic issues that have affected a lot of business in the UK. This has certainly been re- flected in the market for dental practices, which has seen – and continues to see significant ac- tivity, particularly with regard to NHS practices – but also with re- gard to private practices as well. Positive thinking An idea I like at the moment is that I am not the managing part- ner of a solicitors’ practice – I am the managing partner of a busi- ness selling legal services. The same can be said of dental prac- tices – they are in my view not practices, but businesses selling dental services. Consequently, anyone looking to purchase a practice should ask, first and foremost, whether this is this good business? More significant- ly, will it continue to be a good business after the principal’s de- parture or are there opportuni- ties you have identified that will enable you to develop a practice into a good business? This is the key question a potential buyer should ask himself when looking at practices to buy. Having identified a practice and having determined it fits your bill, the buyer and the seller will embark upon the legal process where the assets of the practice will be transferred. This article is intended to give an overview of that process. Bear in mind how- ever that this is very much a gen- eral guide and is not intended as a detailed consideration of all that is involved in what is an extremely detailed, complex and in many cases lengthy legal process. While the title may refer to the purchase of a practice, it is hoped that this article will provide useful information for sellers as well. Negotiating the deal In English law, a verbal contract is just as binding, and just as en- forceable, as a written contract. There may be difficulties in es- tablishing the precise terms of the contract – particularly if there is a dispute, and proving certain terms in the absence of anything in writing may be troublesome to put it mildly, but in principle, if an offer by one party is accepted by another then there may well be a binding contract. The only time this does not apply is where property is in- volved. In this situation, the con- tract must be in writing and cer- tain other formalities need to be present for a binding contract to be entered into. Given that most practices involve a property element, the chances of inadvertently entering into a binding contract are slim. However, in order to avoid this scenario, it is recom- mended that all correspond- ence – and in particular any that may contain an offer, be headed, “Subject to contract”. You will have seen this phrase numerous times on estate agents’ boards. From a legal perspective, this means that an offer may have been accepted, but at law, there is still no legally binding agreement. It is important to be as pre- cise as possible when conclud- ing a deal. For example, is stock included or excluded from the price being negotiated? Are there any items of equipment or other fixtures at the practice, which may not be included in the price? Is the deal dependent upon the Seller remaining at the practice post completion and if so on what terms? Is there any equip- ment on lease or hire purchase and if so will that be paid off, on or before completion? The legal bit Once the deal is done (or “heads of terms” agreed), it will be neces- sary to instruct solicitors to affect the transfer of assets. These days more than ever, it is necessary to instruct a solicitor who is dentally aware – a solicitor who does not know his PDS from his GDS or what is meant by a Capitation Scheme does not have the requisite knowledge to guide you through the process without a significant risk that something may go wrong either during, or perhaps more importantly from you point of view, after the com- pletion of the purchase. Once solicitors have been in- structed the legal process can commence. There is no dif- ference between the process followed for the acquisition of a dental practice and the purchase of a residential property- the legal principles are precisely the same. The process can be broken down into these stages: • Pre exchange of contracts • Exchange of contracts • Post-exchange/pre-completion • Completion • Post-completion • Pre-exchange of contracts. As stated at this stage, a deal has been agreed, but there is still no binding legal agreement. There are essentially three key matters, which need to be attended to. First, the sale agreement or contract has to be negotiated. Is- sues such as how the purchase price is to be split between good- will, equipment and property will need to be agreed (always seek your accountant’s advice on this due to the tax conse- quences). How will partially completed treatments be dealt with? Is there to be a retention for failed treatment and if so, how much and for how long will it be held after completion? The issues are numerous and as a consequence, contracts can be lengthy and technical docu- ments. It can take some time for the form of these documents to be agreed. Secondly, your lawyer should carry out what is known as the due-diligence process. In es- sence, this means obtaining in- formation and documentation about the practice and the prop- erty to ensure there are no prob- lems that could affect the prac- tice going forward. Part of this process includes sending detailed questionnaires to a seller’s solicitor. A solicitor should be asking for up-to-date copies of equipment-inspection certificates, contracts of employ- ment, and contracts with asso- ciates and other self employed persons. If the practice is an NHS practice, then a copy of the NHS contract should be provided to- gether with NHS pay statements so that UDA performance can be checked. The list goes on and on, suffice it to say that when acting for a buyer it is not unusual to end up with one if not two files of So you want to buy a dental practice? John Grant sheds some light on what’s involved in this complex and time-consuming process Changing rooms ‘The same can be said of dental practices – they are in my view not practices, but businesses selling dental services’