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MediFinancial - Why have an agent when you can have a broker?
Why have an agent when you can have a broker?

Why have an agent when you can have a broker?


Whether you are buying or selling a dental practice, the decision to do so is arguably one of the most important decisions a dentist can ever make. For a seller looking to get maximum return for their asset, the valuation is very important, but sellers should be wary of inflated initial valuations that are given when the practice first goes on the market. More important is the actual price that is ultimately agreed and paid. For the buyer, it is always vital to purchase the right type of practice, taking into consideration the potential for future growth and how this fits with their ambitions.

Selecting the most suitable buyers for each vendor is a skill and bringing the two parties together in the shortest possible time and in a manner in which expectations on both sides are met, requires knowledge and expertise. At Mediestates we specialise solely in the sale and purchase of dental practices of all sizes across the UK. Our focus is on brokering deals between buyers and sellers, bringing the two parties together to ensure swift and successful negotiations that meet the needs and expectations of the vendor.

Getting the right match
buyers that perfectly match the sellers’ criteria and facilitate introductions. There is little point in introducing any seller to the wrong type of buyer, so it’s important from the outset that both parties are likely to proceed to a final agreement.

By specifically matching the wants and needs of our extensive database of potential buyers with the desires and expectations of sellers, we are able to bring the two parties together in an atmosphere of mutual respect and intention, meaning we can more successfully bring deals to a close. We don’t charge buyers who register their interest with us a monthly membership fee, instead we have a list of selected buyers who we know are in a position to move quickly for any practice that fits their criteria. These buyers pay a percentage of the sale fee when we can find them the right practice. This process makes the transaction fully transparent for everyone involved and means we can act legitimately and objectively for both parties.

In concentrating on brokering the deal we go much further than an ‘agent’ in the traditional sense. We guide both parties through the whole buying and selling process from start to finish, and often beyond. And because we understand the ambitions and aspirations of both sides of the transaction, we can ensure that agreement is reached in the minimum amount of time.

Agreement in this case should not be confused with conciliation. Our record proves that we get excellent deals for both our buyers and sellers. By concentrating on bringing together two sides, who we know from our experience are likely to reach agreement, we are able to broker deals without resorting to confrontation.

Recommendations
Some people question whether the role of a broker enables complete impartiality. In my view, that is the absolute essence of what brokering is all about – ensuring both sides benefit. If this can be achieved through a process of matching the needs of both parties and reaching agreement through negotiation without any altercation, all the better. Having been in this business for almost 15 years, I know that if we couldn’t be impartial, very few of the agreements we broker would go through. Moreover, Mediestates wouldn’t have built a business on personal recommendation, nor have so many satisfied clients, be they vendors or buyers.


Practice one
Practice Location
– located within a large rural market town, this practice was originally established in 1973 and was acquired by the exiting principal in 1982. The premises comprise a converted residential terrace, which is perfectly situated within a central location and benefits from excellent transport links, nearby parking and a wide range of local shops and services.

Type of practice – this is a three-surgery, fully-private practice with one associate and a hygienist working alongside the principal to deliver the income. There is plenty of room for expansion if required as the principal owns the property next door to the dental practice. The freehold premises were owned by the vendor who was happy to sell on a freehold or leasehold basis.

Financials – the turnover of £700,000 is derived predominately through specialist and fee per item income supported by a small capitation scheme. The practice boasts huge potential to increase turnover and subsequent profits by growing the general dentistry treatments and extending the opening hours.

Buyer appetites – the practice was sold on the general market with comprehensive details being sent to over 160 buyers, alongside a further 9,000 webviews. Despite multiple viewings taking place the principal chose to accept a below asking price offer on the basis of an expedited transaction.

Reason for sale/incoming purchaser – due to the high number of implants being placed, the outgoing principal agreed to continue working at the practice post sale to ensure the stability of turnover going forward. The incoming buyer was a first-time purchaser looking to buy a specialist practice.

Price achieved – the sale was agreed on a leasehold basis at £500,000 inclusive of goodwill, equipment, fixtures and fittings. A small portion of the sale price was deferred for 12 months, due to the risks associated with acquiring a specialist practice.
Practice two
Practice location
– this practice was set up from squat by the outgoing principal over 35 years ago and is located on a busy main road, close to a large town centre area. The practice benefits from having ample parking on site for up to 10 vehicles.

Type of practice – this is a three-surgery, predominantly NHS practice with plenty of scope for expansion through the addition of further surgeries. Income is currently generated by two full-time associates alongside the principal. The freehold premises, valued at £163,500, were owned by the vendor who was open to options with regards selling or retaining the freehold.

Financials – annual turnover of £463,485 is delivered through three NHS contracts, two GDS and one PDS+, alongside a small amount of fee per item work. The two GDS contracts combined totalled £377,000 for provision of 12,000 UDAs and 260 UDAs. The PDS+ contract of £47,000 for 2,000 UDAs was subject to renegotiation with the area team in 2017. There is huge potential to increase the private turnover with additional chair time available and potential to add further surgeries.

Buyer appetites – we successfully marketed the practice with sales particulars being sent to 100 of our Premier Tier buyers. Interest in the practice was high resulting in 20 viewings being arranged and offers subsequently placed above asking price.

Reason for sale/incoming purchaser – the vendor was looking to retire, however agreed to work on at the practice part-time to help maintain the goodwill post-sale. The incoming purchaser already owned two other practices within the locality and was keen to further expand their existing portfolio.

Price achieved – £888,500 inclusive of the freehold, goodwill, equipment fixtures and fittings.
Practice three
Practice location
– established for over 70 years, and having relocated in 1989 to new premises, this practice is located in a bustling seaside town in the south west. It is situated at the top of the high street and benefits from on street parking as well as good transport links and nearby shops and services. The practice came to market due to the three equal partners of the business wishing to retire.

Type of practice – this is a well established, five-surgery practice with a loyal and long standing patient base. The main income source is generated through private fee per item patients, supported by four NHS contracts and a small capitation scheme. The outgoing principal works alongside four associates and two hygienists to deliver the income. The practice is split over two adjoining properties with three surgeries in one and two surgeries in the other.

Financials – total turnover is £1,057,619, which comprises £132,000 NHS, £44,000 NHS orthodontic, £30,000 capitation and £815,619 fee per item treatments. There is further scope to increase the private income by fully utilising the available chair time and extending the practice to add another surgery.

Buyer appetites – due to the size and specification of this practice it was marketed exclusively to our Premier Tier purchasers, resulting in significant buyer interest. Within 11 days of first marketing, an offer was accepted from a corporate purchaser.

Reason for sale/incoming purchaser – two of the three partners had already retired from clinical duties and the third was hoping to do the same in preparation for eventual retirement. The corporate purchaser was keen to expand their presence within this area of the country.

Price achieved – £1,035,000 inclusive of goodwill, equipment fixtures and fittings. The sale was agreed on a leasehold basis at an annual rental of £27,500.
Posted by: Dean Barker on 03 Aug 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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