The journey of a practice sale or purchase starts with the crucial step of due diligence. It is here that your solicitor will ensure that the practice has everything in order, guaranteeing transparency of all available information.
A potential buyer has an increasingly larger task when investigating the practice he or she is about to purchase; likewise sellers are burdened with documenting every element of their practice to facilitate a sale.
It is the due diligence process that provides the buyer with the information required to make the right decision, making the process a necessity.
Due diligence, often perceived as being rather complex, is the obtaining and reviewing of the legal and financial information by the buyer, to ensure that they fully understand the practice and are aware of any issues that may affect the price or their decision to buy.
The initial process requires the seller to answer a form of detailed due diligence questions and provide supporting information and documentation. Once we are in receipt of this material we are able to advise on the structure, performance and operating of the business.
At Goodman Grant we have identified this as an area of the transaction, which can be daunting for both the buyer and the seller. When our clients are buying a practice we support them by going through the replies and supporting documentation in detail, providing a comprehensive report and identifying areas where we believe further enquiries should be made to find out more information about the business. As this exercise unfolds we can identify areas where you may need protecting. Additionally, this will allow you to understand the performance of the practice, whether it be the private income or the UDA performance under an NHS contract, as well as the everyday functioning of the practice. This also allows you to start to plan with a clear view for when you take over at the practice.
Where our client is selling their practice we aim to offer guidance – we can help you provide the answers to the questions raised by the buyer’s solicitors and deliver the information they are seeking. Having such assistance can speed up the transaction and also take the headache away during what is a busy and sometimes stressful time for both the seller and the practice. We are on hand to ensure you provide the correct information in a timely manner. We have recently introduced the use of a data sharing facility on our website, docSAFE which permits the easy transfer of documents online.
We have a detailed understanding of the whole process, which means we can help our clients with the due diligence and in particular the areas that are often difficult for clients. This usually involves providing the correct documents that the buyer is asking for, from commercial contracts that the practice is engaged in, to information about employees or evidence on the maintenance and quality of the assets which are being sold. Typically, experienced dental lawyers will enquire about all aspects of the practice, reviewing accounts, maintenance arrangements, patient information, compliance licenses and NHS contract performance levels if applicable. An effective and comprehensive due diligence process is therefore essential, to protect both parties and ensure that if there are any issues these are identified before the buyer is legally bound to proceed with the purchase.
From our experience at Goodman Grant we have seen the potential pitfalls of not instructing dentally aware solicitors. This can lead to a purchase or sale being delayed for a number of months, and sometimes even falling through altogether.
We understand the challenges for both buyer and seller during the due diligence process, from the legal obligation on the seller to provide accurate information, and also for the buyer to fully understand the practice they are inheriting. Buying or selling a practice is one of the biggest decisions a dentist can make in their career. With our wealth of knowledge and experience we are well suited to make it a positive experience, whether it is the beginning of your career or the last step towards retirement.
Author Ben Williams, joined Goodman Grant in May 2013 and works as a Paralegal in the Leeds Office assisting fee earners on Dental Employment Matters and Dental Practice Sale and Purchases’