It is always a very sensitive time when a practice is transitioning to new ownership. Practice owners can feel a great attachment to their team, having spent time and resource on their development, as well as getting to know them on a personal level. When told the news, team members can feel vulnerable and anxious about what the future may hold and so delivering the right message at the right time is critical for success. 

Before the transition

Whether the proprietor has decided to sell to an individual or a corporate group, the value of the dental team is recognised by potential buyers and they will often seek to retain staff. It is understood that the front-desk team’s relationships with patients adds goodwill, as does the approachable and professional dental nurses and hygienists. If the seller is unable to tell the team of the change early on in discussions, they may want to consider ways in which they can help the team to prepare for the change so that they do not feel exposed when they are told the news. Are the team up-to-date with their training and educational needs for confidence in what they have to offer the new owner? Is their appraisal detailed with all their achievements to date? Have their personal development needs been identified and an action plan put in place? 

All in the timing

When to tell the team about the sale of a practice is a debated subject. Too soon, and it opens up a window for gossip and uncertainty, particularly if word gets out to patients who may then look to switch practices or be reluctant to commit to more extensive treatment. Too late, and the team might feel let down and shocked by the imminent change in management. Unfortunately there is no mathematical equation for working out the right moment and it will vary depending on the individual practice. 

Supporting the team

The team emotions are often one of the heaviest burdens on a principal and so selling to an experienced purchaser who can be trusted to continue looking after all members of staff.  Rodericks Dental, for example, offers a quick completion so that the “secret” does not need to be kept for a lengthy period. Further still, they can visit the practice out of working hours, even at the weekend, and they offer extensive training and support services for all professionals to advance their careers.

Selling a dental practice can opens up great new opportunities for the owner and the team. Managing the team during the transition can be challenging but with the right approach and support, it can go smoothly.

For more information please visit www.sellyourdentalpractice.net, email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 01604 602491 (option 5).

Follow us on Facebook www.facebook.com/rodericksdental,

Twitter @rodericksdental and LinkedIn

Harry Singh considers the repercussions of having the Conservative party in power for dentists investing in buy-to-let property....

So, it’s old news that in May the Conservatives came to power and set the UK a-flutter for all sorts of reasons in all sorts of areas. For those of us who are in the property game there was something of an initial sigh of relief – just in that regard – since the Labour party had said it would introduce rent controls, leading to fears that the property industry would become more heavily regulated and overtaxed.

But what has the reality been? Has there been the expected increase in confidence in the UK property market? Given the last few months of political shenanigans, what might we expect over the next few years?

Broken promises

The truth is that George Osbourne is now looking to restrict mortgage interest tax relief for buy-to-let property purchasers to the basic rate of income tax, even if, as many dentists do, they pay the higher tax rates of 40% or 45%. The current system, whereby buy-to-let landlords can offset their mortgage interest payments against their income, is set to be phased out from 2017.

In advance of the Conservative party conference in October, Damian Green, a Conservative MP, laid it out for us in The Telegraph. He wrote: ‘We need to reclaim the mantle of the party of home ownership, and to do that we not only to build more houses but ensure that they are available for people to buy. Too many new houses and flats are immediately snapped up by buy-to-let landlords, and never become available for first-time buyers. I am delighted that we have taken the first steps towards removing the tax advantages for buy-to-let, but I suspect there is much further to go (and therefore more political courage required).’

Well let’s face it – all of that certainly doesn’t tally with what I and others perceived we would be dealing with; namely, a political party that appeared more in favour of landlords and property investors than Labour in the run up to the election.

If you feel you may be affected by the proposed changes I would encourage you to visit http://saynotogeorge.co.uk/. There is a wealth of information on there explaining the potential repercussions in depth, and if you decide you are against what is being planned you may choose to sign the on-line petition. 

Dealing with reality

According to the experts, however, it’s not all gloom and doom. As reported in The Guardian, Andrew Montlake, a director at mortgage broker Coreco, said: ‘These changes will undoubtedly make some prospective landlords think twice about entering buy-to-let, but the response we have had from landlords suggest that while it will cut down on their profits, it is not enough to fundamentally change their views and start selling off all their properties.

‘It will just be a case of taking these changes into account when making a business decision on each property to see if the basic maths of a new purchase still works.’

We also know that earlier forecasts of interest rate hikes mid-2016 are unlikely to come to pass now, with conservative (with a lower case ‘c’!) predictions suggesting the first quarter of 2017 to be more likely. This is good news for anyone looking to source a mortgage over the coming months.

However, here’s the caveat – always be prepared for the worst. When making your buy-to-let decisions hope for the best but factor in the worst. Make sure your calculations allow for George’s tax changes to come to pass and interest rates to increase at any time, and you’ll be able to face the future with equanimity come what may.

Harry would like to share his professional property secrets with his dental colleagues free of charge. For further information, please visit www.dentalpropertyclub.co.uk.

                                                                                                   -ends-

Harry would like to share his professional property secrets with his dental colleagues free of charge. For further information, please visit www.dentalpropertyclub.co.uk.

The content of this article is for information purposes only and should not be relied upon when making legal or financial decisions. It is recommended you seek the help of a financial and/or legal expert to assess your needs fully before making any decisions and/or making changes.

Bio - Dr Harry Singh, BChD (Leeds), MFGDP (UK)

After qualifying from Leeds Dental School in 1996, Dr Harry Singh followed the traditional VT, Associate and Principal routes in dentistry, owning three dental practices along the way. Amongst these was ‘Aesthetics’, an award-winning private practice in Hertfordshire.

Like most dentists, Harry was making good money; however, it left him working long hours and missing out on family time, hobbies, holidays, going to the gym, healthy eating, etc. Even when Harry was away from the practice, he found himself thinking about patient emergencies or complaints, as well as staff issues.

Feeling alone on a professional level and unhappy with his lifestyle, Harry sought to make a change so, as well as practising dentistry, he started to invest in property and stumbled upon some professional property secrets that helped to develop his business interests. 

Over a 2-year period Harry bought 27 properties and sold 6. The profits from these deals allowed him to buy into dental practices and set up 2 squat practices.

The passive income that these properties brought in covered all of his financial commitments, enabling him to reduce his clinical dentistry hours and to spend more time with his family and on himself.

Eventually he found that he was making more money from property and practising dentistry two days a week, rather than full-time. Two years ago he retired from dentistry to concentrate on the property side of his work.

He now has a property portfolio valued at around £7 million, yielding a passive income of £8000 per month.

Harry Singh considers the repercussions of having the Conservative party in power for dentists investing in buy-to-let property.
 

So, it’s old news that in May the Conservatives came to power and set the UK a-flutter for all sorts of reasons in all sorts of areas. For those of us who are in the property game there was something of an initial sigh of relief – just in that regard – since the Labour party had said it would introduce rent controls, leading to fears that the property industry would become more heavily regulated and overtaxed.
 

But what has the reality been? Has there been the expected increase in confidence in the UK property market? Given the last few months of political shenanigans, what might we expect over the next few years?
 

Broken promises
 

The truth is that George Osbourne is now looking to restrict mortgage interest tax relief for buy-to-let property purchasers to the basic rate of income tax, even if, as many dentists do, they pay the higher tax rates of 40% or 45%. The current system, whereby buy-to-let landlords can offset their mortgage interest payments against their income, is set to be phased out from 2017.
 

In advance of the Conservative party conference in October, Damian Green, a Conservative MP, laid it out for us in The Telegraph. He wrote: ‘We need to reclaim the mantle of the party of home ownership, and to do that we not only to build more houses but ensure that they are available for people to buy. Too many new houses and flats are immediately snapped up by buy-to-let landlords, and never become available for first-time buyers. I am delighted that we have taken the first steps towards removing the tax advantages for buy-to-let, but I suspect there is much further to go (and therefore more political courage required).’
 

Well let’s face it – all of that certainly doesn’t tally with what I and others perceived we would be dealing with; namely, a political party that appeared more in favour of landlords and property investors than Labour in the run up to the election.
 

If you feel you may be affected by the proposed changes I would encourage you to visit http://saynotogeorge.co.uk/. There is a wealth of information on there explaining the potential repercussions in depth, and if you decide you are against what is being planned you may choose to sign the on-line petition. 
 

Dealing with reality
 

According to the experts, however, it’s not all gloom and doom. As reported in The Guardian, Andrew Montlake, a director at mortgage broker Coreco, said: ‘These changes will undoubtedly make some prospective landlords think twice about entering buy-to-let, but the response we have had from landlords suggest that while it will cut down on their profits, it is not enough to fundamentally change their views and start selling off all their properties.
 

‘It will just be a case of taking these changes into account when making a business decision on each property to see if the basic maths of a new purchase still works.’
 

We also know that earlier forecasts of interest rate hikes mid-2016 are unlikely to come to pass now, with conservative (with a lower case ‘c’!) predictions suggesting the first quarter of 2017 to be more likely. This is good news for anyone looking to source a mortgage over the coming months.
 

However, here’s the caveat – always be prepared for the worst. When making your buy-to-let decisions hope for the best but factor in the worst. Make sure your calculations allow for George’s tax changes to come to pass and interest rates to increase at any time, and you’ll be able to face the future with equanimity come what may.
 

Harry would like to share his professional property secrets with his dental colleagues free of charge. For further information, please visit www.dentalpropertyclub.co.uk.
 

*          *           *             *

The content of this article is for information purposes only and should not be relied upon when making legal or financial decisions. It is recommended you seek the help of a financial and/or legal expert to assess your needs fully before making any decisions and/or making changes

Bio - Dr Harry Singh, BChD (Leeds), MFGDP (UK)

After qualifying from Leeds Dental School in 1996, Dr Harry Singh followed the traditional VT, Associate and Principal routes in dentistry, owning three dental practices along the way. Amongst these was ‘Aesthetics’, an award-winning private practice in Hertfordshire.

Like most dentists, Harry was making good money; however, it left him working long hours and missing out on family time, hobbies, holidays, going to the gym, healthy eating, etc. Even when Harry was away from the practice, he found himself thinking about patient emergencies or complaints, as well as staff issues.

Feeling alone on a professional level and unhappy with his lifestyle, Harry sought to make a change so, as well as practising dentistry, he started to invest in property and stumbled upon some professional property secrets that helped to develop his business interests. 

Over a 2-year period Harry bought 27 properties and sold 6. The profits from these deals allowed him to buy into dental practices and set up 2 squat practices.

The passive income that these properties brought in covered all of his financial commitments, enabling him to reduce his clinical dentistry hours and to spend more time with his family and on himself.

Eventually he found that he was making more money from property and practising dentistry two days a week, rather than full-time. Two years ago he retired from dentistry to concentrate on the property side of his work.

He now has a property portfolio valued at around £7 million, yielding a passive income of £8000 per month.

Understanding that many dentists feel as isolated and trapped as he did, Harry wants to ‘give something back’ to his dental colleagues via the Dental Property Club, which is designed to share with members the information, expertise and knowledge he has gathered along the way.

www.dentalpropertyclub.co.uk

Many practice sales agents will use percentage of turnover to value a practice – which can lead to an unrealistic expectation on which many vendors, particularly those approaching retirement, will base their futures.

There is a significant problem with this; a valuation through percentage of turnover is an increasingly unreliable way of valuing a dental practice. It only works on the assumption that the practice that is being sold is just like other practices in the area which, unless it happens to be a predominately NHS practice, is unlikely. Yet the majority of practice sales agents work with this method – and will charge from anywhere between 2-4% for doing so, equating to thousands of pounds in fees.
 

The fundamental issue with percentage of turnover is that it disregards many important factors that may affect the actual value of a practice – factors that you can be sure a buyer (and the buyer’s bank) will be quick to scrutinise, like the type of dentistry being delivered, the quality and state of equipment, the sustainability of the practice and the potential for expansion. In fact, by disregarding these factors, valuation through percentage of turnover begins to look a great deal like guesswork – particularly expensive guesswork – which completely ignores one essential aspect that will ultimately mean more to any buyer than any other: profitability! By failing to take a practice’s overall profitability into account, as well as the assets and the liabilities on the balance sheet, any valuation is bound to be unreliable, unrealistic and, ultimately, unachievable.
 

Why, then, do many practice sales agents continue to use this method? Firstly, it is quicker – a valuation based on turnover can be calculated relatively easily as long as the practice’s accounts are well-maintained. Secondly, the agent’s main objective is to acquire the initial commission to sell the practice, collect the fee and move on. They are not required to become invested in the priorities that the vendor might have – like ensuring the welfare of patients and staff or finding a buyer who can continue to uphold the standards and ideals that the practice has come to represent. Their remit is to find a buyer who is willing to pay and complete the transaction; they have no real reason to search with you for the ‘right’ buyer.  
 

Therefore, finding the right practice sales agent – one who will provide you with a service which is truly represented by the fees charged – is one of the most important elements of selling a dental practice. It can ultimately save a great deal of time, anxiety and cost if you find an agent who is willing to go the extra mile in the first place. Ideally, you need someone who is sensitive to the specific features of your practice and the individual needs you exhibit as a vendor. You need someone who has taken the time to understand your motivations for selling, who understands the overarching philosophy of the practice and duly considers a buyer on these terms and, most importantly, who has the expertise and experience to thoroughly analyse the practice’s accounts in order to establish a realistic and achievable sales price.

 

For more information about joining the Portman Dental team, please visit www.portmanhealthcare.co.uk or call Gary Chapman on 0207 281 9489 or 07966698130

Gary Chapman is the Head of Mergers and Acquisitions at Portman Dental. A qualified dental technician with over 30 years’ experience in the dental industry, including running his own dental laboratory and a Harley Street facial aesthetics clinic, as well as working as the Director of Acquisitions at James Hull Associates, Gary has a unique understanding of the profession. He now uses his extensive expertise to help the Portman Dental Group grow and, to date, he has identified all but two of the practices acquired by Portman Healthcare.

Geography can play a significant role in the success of any practice transaction. From regional variations in value, demand and activity to patient demographics, understanding the local trends and market characteristics are all vital when ensuring the optimum transactional outcome. 
 

Christie + Co has specialists in 16 locations across the country, providing convenient, reliable access and insights into the local markets. For instance we understand that the areas that see the most interest are London and the South East, with the Midlands and some areas in the North also experiencing very high demand. This causes significant regional variations in practice valuation and it seems that the closer you get to the extremities of the UK, the more values ‘fall off’.
 

With years of experience valuing businesses across many market sectors and experts located across the UK, Christie + Co understand the significance of local knowledge. So if you’re looking to purchase a practice and want to ensure you make the most appropriate decisions based on in depth local and national insight, contact the experts at Christie + Co today.
 

To discuss how Christie + Co might help you achieve your future plans please contact Simon Hughes on 020 7227 0749

We all have the dream of owning our own practice, however the thought of making that transition is often frightening.
 

My first thought was, what can I afford? The only loan I’d ever got was for my home, and that was in the days banks were handing out money to anyone and everyone. This is where Dental Elite (DE) Finance, and in particular Becki, were invaluable. Long before I found the right practice, Becki had taken all the relevant information from me and let me know what I could realistically expect to get from the banks given my circumstances. This really narrowed down my search criteria, allowing me to stop wasting time on those practices that were out of my reach.

This was to be my first acquisition, for a reasonably sized practice in South Yorkshire with a healthy NHS contract. Before committing, DE Finance ran through all the figures again, ensuring the purchase was financially viable, before we moved forward.

In between dealing with the sellers and our respective solicitors, as well as having to turn up to work each day, I didn’t have time for much else. In DE Finance I felt like I had a PA, with Becki contacting all the major banks (and some I’d never heard of) on my behalf, leaving me to get on with other things. I left Becki to fight my corner as to why they should lend someone who has never run a business, let alone a dental practice, such a large sum of money. This I thought was going to be the most stressful part of the purchase, but it turned out to be the easiest.

Becki had influential contacts in all the right places, and offers from the banks quickly came rolling in. More importantly, because Becki was involved, the banks knew they would be competing against each other, and subsequently provided offers at fantastic rates. I certainly didn’t have time to approach all these banks myself, nor would I have received the rates I did.

Things didn’t end here however. Becki followed the process right through to completion and beyond. She was always there when I needed to contact her, even out of work hours. When the bank was labouring with the sale at times, she would intervene on my behalf and get her contact to push things along. It was great just being able to pick up the phone when I wasn’t sure about something, to receive some expert guidance, or even just some much needed reassurance.

Would I recommend Becki? Absolutely, without hesitation. I know who the first person I ring will be when I’m ready to make my next acquisition, even if it’s not a dental practice. And what did this fantastic service cost me? Nothing, not a penny!

Thank you Becki for making this whole process so easy for me.

- Imran Ahmed

By listening to the right advice, and being organised, purchasing your first property is an achievable goal. At the beginning of your dental career, when you have begun to put down roots in a practice, buying your own property will be the next obvious step. Of course, there will always be issues in the wider economy that may complicate the process, but it is always possible to overcome these.

One-hundred per cent mortgages are almost obsolete nowadays and the chances of them coming back are slim indeed. Low-deposit mortgages are still out there, and there are schemes you may not know about that can help of which you may be unaware. For example, the Government offers Help to Buy equity loans schemes, which are available to first-time buyers on newly built homes in England. You will need to contribute 5% of the property price while the Government provides a further 20% and then a mortgage covers the rest.

However, even with a low-deposit mortgage, your savings may not be enough. Many first-time buyers ask their family for help, but it is always prudent to document the arrangement thoroughly so everyone knows where they stand. The bigger the deposit you have acquired, the more options you will be offered. When you are looking at your savings, or when you are planning out how much you will need to save, you must not overlook all of the additional costs incurred when buying a property, such as mortgage arrangement fees and stamp duty.

In the current financial market, first-time buyers might benefit from a fixed-rate mortgage. With the Bank of England set to increase the base rate in 2016, anyone on a tracker mortgage will see monthly repayments go up. And with interest rates predicted to rise, if you are on a variable rate mortgage, you may find yourself struggling with repayments. One of the advantages of fixed-rate mortgages is peace of mind. You have no idea how your financial priorities may change over the next few years, so if your mortgage repayments are static, so much the better.

Of course, any advice on home-buying needs to be tailored to your individual circumstances. This is where working with an Independent Financial Adviser (IFA) can be most beneficial. By seeking out an expert who has experience of working with dental professionals, such as one of the IFAs at money4dentists, you can be assured that the advice you receive will be specific to the challenges you face.

Your first step onto the property ladder is just the start: by getting the right advice at this stage, and maintaining the relationship with your IFA, you can progress to making more personal and professional financial decisions in the future.  

For more information please call 0845 345 5060 or 0754DENTIST.

Email This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.money4dentists.com

When Peter Instone and his colleagues were ready to sell their practice, they chose to work with Dental Elite. “We were happy with them in every way,” he says. “They were excellent; we had no problems.

“Being able to talk to the same person throughout the process was useful – they knew everything that was going on from start to finish. Any questions we raised, they were able to get back to us with answers.

“I would certainly recommend Dental Elite to others.”

With a team that is proud to have over a hundred years’ experience in the dental sector, Dental Elite is in the perfect position to assist professionals through the sale of their practice. They have a reputation for offering practical and pragmatic advice and approach each case with honesty and openness.

If you are looking to sell your dental practice and want guidance from the experts, look no further than Dental Elite – contact the team today!

For more information and to find out how Dental Elite can value
and assist your practice sale visit www.dentalelite.co.uk, email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 01788 545 900

In 2006, the NHS and Primary Care Trusts (PCTs) introduced the current funding system to NHS dental practices based on the amount of Units of Dental Activity (UDAs) completed in one year. Since NHS England took over the responsibility from PCTs in 2013 operating this system, a total of 27 Area Teams replaced the 150 PCTs nationwide.

There is no sign the pressure on practices to reach their UDA targets will ease. In fact, underperforming practices today could be finding the targets even harder to meet; any shortfalls in one financial year are carried over to the next, meaning a ‘rolling’ deficit is a real concern for year-on-year figures. During this financial year, NHS England is also required to reduce running costs by between 10-15%, so if anything a tightening rather than a slackening of the rules on meeting targets is inevitable[i].

In the quarter of the financial year ending December 31^st 2014, the NHS published data showing that in England, 88.8 million UDAs had been commissioned. This presented a 0.8% decrease from the same quarter in 2013, equating to 696,000 fewer contracts and also 90,000 fewer contracts than were commissioned in the previous quarter of 2014[ii]. This situation has had a knock on effect that determines the prospect of selling those NHS practices struggling to make the quotas they’ve been allocated. 

The sale of practices with NHS contracts in some areas of the UK has been detrimentally affected where NHS England has over-commissioned dental services. Simply having enough people in a locality to justify a contract hasn’t proven to be reason enough to award one. It doesn’t automatically follow that the community wants more NHS dentistry; they may instead prefer long-standing local private practices, or worse still, not be seeking dental services at all.

Failing to be within 4% of the fixed year-on-year target can be catastrophic, in the most extreme cases practice contracts can be terminated. In examples such as underperformance or closing during contractual hours, NHS England initially serves a breach notice but if the practice then makes any kind of future breach of contract (which may be for an entirely different reason) the contract can be immediately revoked. NHS England will then negotiate a new contract, with less funding. Also, the degree of leniency previously afforded to NHS dentists will diminish with Area Teams having to enforce a harsher approach and breaches of contract are far more likely to be issued this financial year than ever before. In cases of underperformance alone, NHS England may deem that a practice was over-funded for the services being provided and will effectively ask for a refund from the practice (a claw back).

Nowadays, competition is fierce between NHS practices to entice patients through the door so that they have a fighting chance of meeting their UDA targets. This fact contributes towards complicated agreement negotiations when valuing a dental practice for sale. Purchasers (and their financial backers) involved in buying NHS practices must thoroughly research and become assured that the UDA contracts can be maintained and that they have the finances for any necessary improvements to facilitate this. Sellers on the other hand, will want to ensure that the post-completion obligations and liability are kept to a minimum. In short, a shrewd perspective and business plan are two essential ingredients for all involved in the sale of NHS practices. The predicted outcome of patient recruitment plans and any expense involved in them needs to be assessed and built into the valuation of the dental practice for sale.

A claw back of 500 UDA’s is equivalent to a £11,000 reduction in funding (based on average treatment costs) which can seriously undermine profit, so a potential buyer will need these kinds of figures incorporated in the practice value. Essentially, you are on your own in terms of building a patient base, NHS Clinical Commissioning Groups play no part in filling appointment slots. This means examining the practice’s current performance to see if there is room for improvement on reputation and profit.

Action plans cover anything from a complete re-fit of the surgery and reception areas, to designing a trendy website, prioritising SEO and right down to the skill of your receptionist in welcoming patients and putting them at ease. The team at Dental Elite can help you identify key areas to note during the sale of NHS dental practices whilst retaining a realistic view of the changes that actually need to be made to the business; often the simplest aspects such as chairside manner and the comfort of the patient waiting room are the cheaper and most effective alterations needed.

For more information and to find out how Dental Elite can value
and assist your practice sale visit www.dentalelite.co.uk, email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 01788 545 900