Selling FAQ

Selling FAQs

Who are the Pluto Partners?

Pluto Partners is a highly experienced team of dental business advisors. Our Directors have a combined 80 years of expertise in the dental sector. As a client, you will have support from our senior team, including that of Pluto's Clinical Advisor and practicing dentist, Dr Pieter Claassen, who has worked both in the corporate and independent fields. Nick Rolph is our Managing Director and holds impressive experience in M&A and Buy & Build projects and Max Bazzucchini, our Director of Sales, is one of the most experienced brokers in the UK, with plenty of tenacity and determination.

Why should I work with Pluto Partners?

It’s important to use a specialist broker that understands dentistry and has access to a vast list of buyers. Although you may be able to sell your practice direct by advertising in the dental press, our experience is that this may attract initial interest, but quite often we find the values obtained going direct is usually much lower than going via a broker.

A professional brokerage team will be able to help you plan, value and obtain the best offers available in the market and also ensure the buyer has adequate funding in place to buy the practice. Our objective is to help you get the best price available and the best deal structure available on the market. Ultimately, the value of the business is defined by the figures,but also by what buyers are prepared to pay for a business. It is imperative to create a competitive tension during the marketing and selling process, and this rely on the skills and contacts of the selling agent.

What makes Pluto Partners unique?

Access to world-class finance brokers.
Our unique approach is driven by years of experience in valuing, buying and selling dental practices. We provide ACCA Certified Valuation Report.
We use a confidential online data room to view information and share this with legal teams once offer is accepted, to speed up the selling process.
Access to Wealth Management and Wealth Planning and commercial properties management.
Full Financial Due Diligence report is provided on request.
We also offer a second opinion valuation for buyers who want to make sure they are paying the right price looking to acquire their practices.
Our Group valuation and individual practice valuation report is paramount to support business expansion, paired with growth strategy conversation.
We have an extensive network of practices and groups.

What are our fees?

Pluto Partners operates on a no-sale no-fee basis and offers very competitive fees.

Standard fees are 1.5% of total sale value
If the agreed sale price is 10% (or greater) above the original asking price then our fees are 1.95% of total sale value
If the agreed sale price is 10% (or greater) below the original asking price then our fees are 1% of total sale value

All fees listed above are inclusive of VAT (for Asset Sales) and subject to a minimum rate of £4,500 +VAT

How do we value a Dental Practice?

We thoroughly analyse all the figures and present to the market in the most transparent manner, without making unsustainable assumptions. Through experience we foreshadow potential challenges during deals and through teamwork we overcome them. We can count on the expertise of our clinical advisor and partner being a practising dentist, as well as senior M&A executives. Every practice is unique and every single dental practice has a price range of value, dictated by many factors and many variables.

It is important to look at the last 3-4 years set of accounts as well as the latest and up to date management accounts to see any upward or downward income trend, the surgery percentage of utilisation and opportunity to expand are also factors that can potentially increase value and marketability.

Insights: Valuations of dental practices; a Combination of Science & Art

What information do we need from you in order to value a Dental Practice?

Below we summarise some of the key information:

Last four years accounts
Fee income(Private/NHS/Mixed/Plan/Specialist)
NHS performance YTD and for the last four years
UDA rate
Size of contract
Year Established
Number of surgeries
Potential for expansion within existing premises
Percentage of surgeries occupancy
Location
Associate- led or Principal-led
Income breakdown by performers
Understand growth potential
Percentage of payment for all associates and hygienists/therapists/specialists
Support team –their position, days or hours worked, pay rate and start date, bonus pay
Lab and material costs
Marketing costs
Computer system
Details of the property (lease or freehold)
Age of equipment and chairs
Latest CQC inspection report and actions
LAT details
Advice on CQC application process based on Limited Company or Partnership
Last twelve months income from Management account
Plans and reasons for selling

What is the Deferred Consideration of the Sale Price?

The deferred consideration of the agreed dental practice sale price is often driven by the personal goodwill related to the business, i.e. the personal work carried out by the principals, the value related to the personal input of the principals.
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The deferred consideration of the agreed sale price is part of the business price kept by the buyers and released over a period of time, once that the agreed terms are achieved, as a way of minimising the risk on the investment and maximising the goodwill protection.

It commonly applies to private and specialist practices, less relevant to NHS or associate led practices but still applicable in certain circumstances.

A frequent deal structure is as follow ; a payment of 75% of the agreed price is agreed to be paid on completion, followed by a payment of 25% of the agreed price over a period of time ( usually between 3-5 years ) subject to terms such as maintaining practice income or sustaining personal income.

‍When valuing a dental practice we closely analyses the personal goodwill compared to the commercial goodwill of the business, which can drive the price, the terms of the deal and the length of time that a buyer would request a seller to stay in the dental practice post completion, to minimise their risk of investment.

What is EBITDA?

EBITDA is your Earning Before Interest, Tax, Depreciation, and Amortisation.

EBITDA is essentially the true operating profit of the practice ,it’s the number that you see after deducting the running costs from the gross profit. It can vary and it can be adjusted as each business owner could have different costs and different way of running a business. It is commonly used in valuing a dental practice.

What is Due Diligence?

Due diligence is a very important exercise carried out during any dental sales and acquisitions process.

It is divided into legal and financial due diligence. It is an exercise to confirm that all information provided at the time of discussing and agreeing offers is accurate and precise. Information such as accounts,management accounts , patient numbers , staff contracts , NHS contracts and any legal issues such as change of control clauses , lease and property contracts,just to name a few of the documents are usually checked at this stage. An expert legal and financial team will know what to look for in a professional and time effective way.

What is the Earn-Out on the Sale of a Dental Practice?

This is a deal structure when a buyer wish to postpone or defer some of the purchase price when buying the shares or assets of a company, and it is calculated by reference to the performance of the business being bought for a fixed period of time after completion of the purchase. Usually, it is calculated by reference to profits.

What is the difference between Asset and Share sale?

The sale and purchase of a dental practice may involve the purchase of the goodwill and the physical assets of the practice, together with taking an assignment of the leasehold premises from where the practice operates (or acquiring the freehold). This is known as an “asset purchase”.

Alternatively, where the practice is operated by a dental corporate body, the transaction may involve the sale and purchase of the shares in the company that operates the dental practice. This is known as a “share purchase”.

Do I need a Specialist Dental Lawyer?

Never consider the services of a solicitor or a firm with no experience with dental practice sales. It's that simple, but occasionally we have experienced some dental principals going down the route of a solicitor who may be brilliant dealing with selling houses, but could slow down the process of selling your dental practice.

Using an expert dental solicitor will ensure you get the right advice at the right time within budget.

What are the most common legal points when selling a Dental Practice?

There are several issues which regularly crop up when we are dealing with the sale and purchase of dental businesses and companies. Identifying those issues at the outset and rectify them will avoid any potential impact on delaying the timescales of the transaction. The main issue is usually that the lease when is not in the correct name. If it is a share sale then the lease should be in the name of the target company. If it is a business sale then it should be in the name of the sellers.

Other issues related to the lease are:

Leases which prohibit charging
Leases which prohibit use as a dental practice
Leases nearing the end of their term.

With regards to the NHS Contract, aside from the usual under-performance issues there are several points to check in relation to the contract which can cause problems in a transaction, for example;

The Provider on the NHS contract not being the seller
The NHS contract isheld by a limited company but NHS England inserted a change of control clauseon incorporation
The individual shareholders provided a personal guarantee to NHS England when the practice was incorporated and are therefore are ‘on the hook’ indefinitely under the NHS contract.

The main question around the CQC arises when a practice has been incorporated and either the limited company isn’t a registered provider or there is an NHS contract held outside of the company and the providers under that contract aren't registered with the CQC.

How long does the sales process take?

Currently the average timescale for a dental practice sales dealt complete is approximately 6.5 months, 24-28 weeks.

There are many factors, such as the type of practice and the legal and financial support team selected, that can influence the time frame and speedup or slow down the process.

We completed deals in fifteen weeks recently for fully private practices and we completed a large 12-practices group deal in just under seven months.

What do I do after buying my practice?

We like to simplify the process to seven steps:

Initial enquiry ; The vendor sends the completed data collection form to Pluto Partners and initial discussion with our team takes place.
Valuation and practice visit ; This is when we confirm the key variables and arrange a visit at the practice and our report is discussed with the vendor(s). Phase one of Pluto Partners marketing process is explained and begins straight after the meeting.
Viewings ; Phase 2 of Pluto Partners marketing process consists of appointments making with potential buyers already been screened and viewings.
Offer stage ; We negotiate best financial package and best terms , then Heads of Terms are negotiated and agreed.
Due diligence ; Key information and documents are reviewed by legal teams.
On-going Support ; We are there at every step of the way , supporting sellersduring the financial and legal due diligence for a smooth completion.
Completion ; Sales and transfer of funds to vendors bank account.

What to avoid before selling my practice?

We summarise key points to avoid before selling your practice:

Lots of complaints
Failing a CQC inspection
High staff turnoever
Drop in gross income
Reducing profits

What do I do after selling my practice?

Consider accurately life after selling your practice, and make plans ahead of marketing the practice. Whether you are retiring or want to cash in, or want to continue working in the practice or wish to set up a new practice, consider your options prior marketing your practice, and talk to a professional advisor who has helped others making the best choice before.

What if I have an NHS contract?

If your contract is time limited (PDS) instead of open ended (GDS) it may be worth considering a conversion as a GDS contract (if possible) may attract more buyers. There are risks when converting the contracts so it is always advisable to seek legal and financial experts support. Regarding the sale of the dental practice with the NHS contracts,there will be 28 days’ notice between exchange and completion to add to the NHS element of the deal.

When should I inform my staff of the sale?

Selling your dental practice is a very emotional and challenging time in any dental owner’s life. Informing your staff is a crucial step in the dental sales process and this must be done at the appropriate time. If the timing is wrong, it could create unnecessary stress and uncertainty amongst your loyal and faithful staff, and what if the sales is not completed?

The risk is ending up with creating disruption and loss of trust and loss of revenue and more costs. Your solicitor will be able to advise you when the right time to inform your staff of the sale.

What is the sales process of a Dental Practice?

We summarise key points to avoid before selling your practice:

Initial enquiry ; The vendor sends the completed data collection form to Pluto Partners and initial discussion with our team takes place.
Valuation and practice visit ; This is when we confirm the key variables and arrange a visit at the practice and our report is discussed with the vendor(s). Phase one of Pluto Partners marketing process is explained and begins straight after the meeting..
Viewings ; Phase 2 of Pluto Partners marketing process consists of appointments making with potential buyers already been screened and viewings.
Offer stage ; We negotiate best financial package and best terms , then Heads of Terms are negotiated and agreed.
Due diligence ; Key information and documents are reviewed by legal teams.
On-going Support ; We are there at every step of the way , supporting sellersduring the financial and legal due diligence for a smooth completion.
Completion ; Sales and transfer of funds to vendors bank account.

What issues do you come across when selling a Dental Practice?

No practice is the same but we have never encountered an issue that we cannot resolve, sometimes it just takes a little longer. Any problems usually come to light at the due diligence stage when all documents are thoroughly inspected.

What if I own the property freehold?

The options are either selling the property or have a lease in place with the buyer. If you are selling to a Corporate you should know that the property aspect of the deal is not their main interest, however they may acquire your property if you wish to sell it. The property will be valued as a commercial property and not on a residential basis so this is a point to consider when thinking about selling or not.

What if I have a lease on the property?

If there is a lease on the property and the lease is less than 15 years to the expiry date, it is advisable to talk to the landlord about a potential extension and engage the landlord at early stage. Any buyer would want at least 15 years lease or more if possible and the likelihood is that the landlord would ask for his legal costs to be covered.

Do I need to have all my certificates ready and available?

During the due diligence process you will be asked to provide and show your certificates such as the GDC registration for you and your qualified staff, professional indemnity insurance, employer’s liability cover, autoclaves, compressors and X-Rays. Have all those ready and will save you time and during the selling process.

Do I need to prepare an Inventory?

Yes most certainly so, it takes some time and is boring but it will create clarity with regards to the items you are leaving at the practice and the items you are taking with you, also it will avoid any potential arguments and dispute further down the dental sales process.

Will the dental sales process trigger a new CQC inspection?

Care Quality Commission is another potential reason for a delay in practice sale, even sometimes 3 months delays if either the buyer or the seller don't have their DBS check ready and available to submit, or the practice has not been inspected lately. The process of selling the practice will involve deregistration of the seller and registration of the buyer to work at the practice, and this process will likely trigger a new CQC inspection unless one was carried out recently. So have everything ready and DBS not older than 6 months when planning to sell.

What happens to the equipment still leased?

If all or part of your equipment is leased you could either transferring the arrangements to the buyer, if they are in agreement, or paying it off, which is usually most buyers preferred choice.

What are legal warranties?

Most solicitors acting on behalf of their clients as buyers, will advise their client to include in the Standard Purchase Agreement ( SPA ) document, warrant from you as a seller that all information provided including any financial and contractual aspect of the practice is true and accurate.

On the other hand the seller's solicitors should negotiate and dealing with the warranties in a way that protect the vendor and minimise their risks against potential claims in the future.