Dental Tribune United Kingdom Edition

Buying a practice first could be a better option What is the difference between Frank Taylor and Associates and a dental agent? • When we do a totally independent valuation you can rely on and the agent doesn’t. • When we market your property to all of our registered 2000 plus potential purchasers and the agent doesn’t. • When we only ever act for the Vendor and the agent doesn’t. • When we never accept an undisclosed fee from the purchaser and the agent does. Tel: 08456 123 434 01707 653 260 www.ft-associates.com peakingrankly S 1542COR FTA 140x100mm AD3.indd 1 05/01/2011 13:35 April 25-May 1, 201114 Money Matters United Kingdom Edition T he majority of the asso- ciates that I speak with aspire to ultimately be- come practice owners – possi- bly as a result of logical career progression or simply to pro- tect their own position and to be in control as they can often see their income share percent- age reducing. How they must look envious- ly at their colleagues who pur- chased practices in the early to mid 2000’s when it seemed the banks would lend to anyone sim- ply because they were a dentist; asking very few questions and making available the full asking purchase price by way of loan - quite often at rock bottom rates! As we all know the financial world has now changed some- what... The banks are now taking a much more critical approach to any finance requests and will review in depth all aspects of any proposal. The banks main focus now- adays is on the individual(s) who is looking to buy the prac- tice and it is essential therefore to ensure you present yourself in the best possible terms to the bank in question – with par- ticular attention given to three areas: 1Your CV The bank WILL ask for this. En- sure your CV is fully up to date – include all positions worked from VT onwards and try to avoid any gaps in employment/ working history. Include any specialism/additional qualifica- tions and having worked both privately and NHS at a number of practices will be viewed as a good thing. Also, highlight any managerial or staff responsibili- ties you may have undertaken, especially if you have any sepa- rate business qualifications and/ or family friends who do. “It is a big jump from being an associate to a practice owner and the bank will need to b e confident that you can take this step.” 2Track Record/Earnings Most banks would now expect any applicant to have worked for at least TWO years as an associ- ate in the UK before any lend- ing for practice purchase will be considered. It is essential that your fi- nancial accounts are kept as up to date as possible as these will form a key part of any lending assessment - with the banks looking closely at prior GROSS earning (before current prin- cipal) as a guide to what you could achieve as practice owner. i.e. if your gross £100K as asso- ciate (take home say £40K) but are looking to acquire a practice where the current owner gross- es £250K this may be consid- ered too big a jump – unless you can reasonably explain why. We also strongly suggest that you engage the services of a specialist dental accountant. A good accountant will hopefully save you more in tax (with the extra expenses you can claim for) than you pay them to pre- pare the accounts. 3Deposit / Contribution The banks will certainly be look- ing for any prospective purchas- er to put a deposit down towards any new purchase. The banks would prefer cash but WILL consider equity in property as quasi contribution – but be pre- pared as it may not be worth as much in the bank’s eyes as you think (see below as to the value banks place on such property). As a rule of thumb, a 20 per cent contribution is needed; however in certain cases 10 per cent can be con- sidered (and the banks ARE quite often happy to include a contribution – cash or prop- erty - that is gifted from family – which is a common way for clients to get on the practice- owning ladder). For most though, the key here is to build up your cash sav- ings and if your dream is prac- tice ownership, DO NOT BUY YOUR HOUSE FIRST! So many Looking to buy a practice? David Brewer provides a guide for buying your own practice in today’s world ‘It is a big jump from being an associate to a practice owner and the bank will need to be confident that you can take this step’