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MediFinancial - Funding your practice purchase
Funding your practice purchase
Historically, lenders have had very clear credit policies on how they were able to finance clients looking to purchase within the healthcare sector. This meant they were only able support a particular type of client and/or practice. This resulted in red tape and obstacles that needed to be overcome in order to facilitate a loan.

However, more recently, lenders have been given more freedom, which will benefit the sector, allowing for greater financial support. It is our aim, alongside banks, to consequently assist with your business aspirations, making them a reality.

The evolving sector
As such, banks no longer have a specific ‘one size fits all’ credit policy, following guidelines rather than rigid policies, allowing lending representatives to exercise their initiative, providing them with much more movement. Lenders will therefore look at each case on its own merit, really trying to push loan-to-values to 100% unsecured lending in some cases.

This allows lenders to evolve alongside the expanding healthcare sector. Such movements are incredibly exciting news, as it means that the market has really opened up, providing buyers with options that in the past would not have been possible.

How we can help
The scope on lending for a practice purchase has many considerations and variables. At Medifinancial we will contact the banks and building societies on your behalf, in order to secure the best possible deal that fits with your individual requirements.

We have built valuable relationships with the lenders through the years and using our expert knowledge, we are able to present your case to them in the most attractive way, which results in a more positive outcome. We will provide you with whole of market research, allowing us to source the very best deal available to you through our bespoke advice.

What can I expect?
Using the tailored service that Medifinancial provides, you will benefit from our preferential rates, competitive loan-to-values and repayments terms. The rates that we are receiving at present are as low as 1.98% above base and to reiterate, the loan-to-values that we have arranged reach 100% of the purchase price. This alone indicates that this is a great time to purchase as the low rates and high loan-to-values reflects the banks incredibly positive appetite to lend in this sector.

It is often a daunting notion to purchase a practice, particularly if you are a first-time buyer. We aim to provide you with the support needed in order to take that plunge. From the offset, you will be provided with one point of contact in the shape of a financial adviser that will continue with you on your journey of purchasing a practice through to completion and thereafter.

We will assist you with any queries throughout the process of your practice purchase, no matter how significant you believe them to be. As such, we understand the importance that we are easily contactable for you. The advisers at Medifinancial are available until 9pm on Monday-Thursday and 5pm on Friday, ensuring you are able to make contact outside of your working hours so that you are truly able to utilise the service to its full potential.

The adviser will aim to make this experience as streamlined and stress free a possible as we understand how important your time is to you.


Practice One
Practice Location:
located within a densely populated residential area, this practice benefits from ample free parking facilities as well as close proximity to local amenities/shops. The current vendor acquired the practice in 2013 through Mediestates, with the practice established for over 60 years prior to that. Due to the vendor’s emigration plans, the practice was returned to the market in 2016.

Type of Practice: this is a five-surgery mixed practice situated within a converted residential property with plenty of scope for increased chair time and additional space for future expansion. The freehold premises, owned by the vendor, were to be retained with a new 15-year lease created for the incoming buyer. The outgoing principal was generating two thirds of the income, alongside two associates and a therapist.

Financials: total turnover at the practice is £543,000 with £410,000 delivered through a GDS NHS contract. The UDA target of 14,950 produces a healthy UDA rate of £27.52. The remaining income is generated through a £25,000 capitation scheme and £108,000 private fee per item work. Staff costs at the practice are comparably low, which helps secure a strong net profit.

Buyer Appetite: the practice was sold on our general market tier with nearly 6,000 buyers viewing the opportunity via our website, 600 buyers receiving full sales particulars and multiple viewings taking place.

Reason for sale/Income purchaser: despite their plans to emigrate, the outgoing principal was prepared to stay on at the practice in the short term to support a transitional period. The incoming buyer owns a small number of dental practices and was looking to increase their regional portfolio.

Price Achieved: £985,000 inclusive of goodwill, equipment and fixtures/fittings. The transaction took nine months from first marketing to completion.
Practice Two
Practice Location:
established for over 50 years, this practice was purchased by the current principal in 1997 as a going concern. It is located within a city suburb on a busy main road close to other local business and shops.

Type of Practice: this mixed practice has two surgeries and occupies the ground floor of a converted residential terraced property. There is room to expand into the upstairs residential flat if required for future growth. The freehold premises, valued at £215,000, was sold alongside the goodwill.

Financials: the practice benefits from a strong capitation scheme, with the annual turnover of £270,000 derived from 50% capitation, 25% NHS and 25% fee per item income. The small NHS contract is made up of 2,600 UDAs resulting in an average UDA rate of £25.96. The majority of income was generated by the outgoing principal, assisted by a part-time associate to deliver the UDA target.

Buyer Appetite: the practice was sold on our priority tier, therefore multiple viewings and offers were received for the practice.

Reason for sale/Income purchaser: the vendor was looking to retire but was open to working at the practice post-sale for one year if required. The incoming purchaser was a first-time buyer looking to work within the practice.

Price Achieved: £560,697 for the goodwill, equipment, fixtures and fittings and freehold. The vendor received offers above asking price.
Practice Three
Practice Location:
this well-established practice was originally founded in 1927 and was acquired by the vendor in 2010. It is located within a small city within the south of England, close to other businesses and amenities. There is a free public car park directly opposite the practice.

Type of Practice: it is a fully private, two-surgery practice with plenty of room for future expansion. The practice is well equipped with an OPG machine and a recent refurbishment within the main surgery. The detached premises were held on a leasehold basis with a moderate annual rental and six years remaining on the lease. The third-party landlord agreed to grant a new 15-year lease as part of the transaction to assist the incoming buyer with securing bank funding.

Financials: annual turnover of £420,000 is made up of £240,000 fee per item work, £90,000 capitation and £90,000 specialist treatments, including implants and orthodontics. The specialist treatments were being carried out exclusively by the outgoing principal, who was supported by an associate and a hygienist. The cost base at the practice was relatively high, allowing for an incoming buyer to make efficiencies post-sale.

Buyer Appetite: the practice was advertised on our general market, with over 100 buyers receiving full sales particulars and multiple viewings conducted.

Reason for sale/Income purchaser: the vendor owned two discrete practices and was looking to reduce their responsibilities by selling one of them. They were prepared to work on at the practice to deliver the specialist treatments, ensuring stability of turnover post-sale. This was a first practice purchase for the incoming buyer, who was looking to work as the full-time principal.

Price Achieved: £415,000 inclusive of goodwill, equipment, fixtures/fittings.
Posted by: Kimberley Parker on 22 Jun 2017

General Buyer Terms

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 1998. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
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