A follow up from Dental Practice Sales and Purchases- Part 1 – Selling a Dental Practice
It took weeks to complete the due diligence: question after question, copies of documents found and provided. But what happens next?
Many sellers report that the next period feels like a lull. The initial excitement of signing heads of terms and working hard to provide due diligence information is often followed by a period of quiet. Selling a dental practice can sometimes feel like a game of table tennis, as the sale is batted back and forth between seller and buyer. Having held the ball during the due diligence process, the seller now passes it to the buyer. The buyer, for their part, will be reviewing the due diligence, their lender will be carrying out a valuation (with the lender’s credit team approving that valuation), and their solicitor will be drafting the sale contract and, based on the due diligence information provided, will raise further enquiries.
Further Enquiries
The phrase “raise further enquiries” resonates with sellers, as it is at this stage that they feel the sale most acutely. More questions to be answered based on the initial due diligence provided is very common and, indeed, to be welcomed. At a basic level, it means that the buyer has read the initial information provided. Further enquiries tend to be asked until the buyer (and their lender) is satisfied; therefore, such enquiries can still be raised a few days before the target completion date. By answering the enquiries as and when they arise, the momentum of the sale is maintained.
Sale Contract
Whilst further enquiries are being answered, the buyer’s solicitor will also send over a sale contract. This is the main document for the transaction and can exceed 100 pages. It is very important to ensure that you have instructed a qualified solicitor who handles dental sales, so that the terms of the sale contract can be explained to you and negotiated on your behalf, protecting your interests based on knowledge and experience of the sector. The sale contract is likely to include references to indemnities, defective work, apportionment of liabilities, warranties, and the transfer of staff.
Property
In addition to due diligence and legal contracts, a new lease might need to be agreed, or a freehold sale may be required, or a third-party landlord may agree to assign an existing lease to the buyer. Our Commercial Property team advises dentists on the common terms required by lenders and dental professionals.
CQC and NHS
At this stage, the buyer is likely to have an interview with the CQC to process the change of registered provider and/or manager, and notice can be served to the local NHS board.
Informing the Staff
By this point, most sellers are about five months into the transaction. With the CQC and NHS approvals in place, a target completion date can be set. It is at this point, if not before, that sellers need to consider informing their staff. Our Employment team is happy to help and guide sellers through that process.
Completion
With the sale contract agreed and all parties giving consent to complete, a phone call between lawyers finalises the sale.
Contact Us
If you have any questions about the above process or would like to discuss how we can help you sell your dental practice or buy a practice, please book your free initial consultation here, call 0114 299 4890, or email info@mdlaw.co.uk.
