HS Financial Services - The story so far...
The story so far...
As we move into the second half of 2017, the demand for dental practices has never been so high, with buyers expressing an interest in all variations of practices.

A surge in demand
In January and February this year (UNW Bulletin and Dentistry magazine), we predicted that there would be a surge of new buyers entering the dental market from overseas and within the UK.
This proved true with the recent major acquisition of large corporate Southern Dental by Switzerland based private equity company, Jacobs Holdings, and small group Genesis Dental Care (which consists of 11 sites in locations including Derbyshire, Lincolnshire, and Yorkshire) being purchased by August Equity, based in London.

Demand is still outstripping supply
The first half of 2017 has seen record number of buyers register to purchase, with 408 new buyers registered with Mediestates since the start of January this year.
This takes us to well over 4,500 buyers looking to buy and ensures we have seen no softening in the prices of dental practices, creating more buying competition and keeping dental practice values strong.

Banks’ taps still open for funding practice purchases
Bank lending rates in the dental sector are at one of the lowest points in recent years, with some deals going through at between 1.9 and 1.98% above base rate. This, alongside extended credit terms and in some cases 100% lending, made funding much more accessible in the dental sector.

NHS contract reform
With the changes to NHS dental contracts still not clear, we do not envisage there being a total contact reform before 2020.
Some concerns brought to the fore by the 81 practices currently testing the NHS dental contract prototype arrangements are:
  • Issues around the complexity of remuneration between activity and UDAs
  • Complicated contract management
  • Incorporating high need patients
  • Assessing access

It is anticipated that the Department of Health will publish an evaluation of the findings and performance of these prototype arrangements in the autumn of this year.

Practice one
Practice location
– located centrally in a city on the south coast, this practice has been established for over 30 years and was set up by the current principal. The practice benefits from good accessibility for all patients, making it a desirable acquisition for the incoming purchaser.

Type of practice – this three-surgery practice benefits from holding an NHS orthodontic contract and an NHS general contract, along with small capitation scheme and FPI patients. There is huge scope within this already thriving business for further growth and development. The freehold premises are owned by the vendor, who was happy to consider offers either with the sale of the property or on a leasehold basis.

Financials – the practice NHS contracts combined held a value of c£220,000. This gave a total turnover of £436,756 with the private income and capitation included. The net profit was higher than average and could be improved further with careful planning by an incoming buyer.

Buyer appetite – the practice advertising was focused towards buyers with a specialist interest in orthodontics. This resulted in a total of seven viewings and a subsequent offer for the purchase of both the business and the freehold property.

Reason for sale/incoming purchaser – the vendor wished to retire from running the practice with the option to stay on if required by the incoming buyer. This was the buyer’s first acquisition and he hopes to obtain further sites locally over the coming years, growing their portfolio in the area.

Price achieved - £440,000 for the goodwill, equipment and fixtures and fittings, in addition to £200,000 for the freehold premises.
Practice two
Practice location
– originally established in 1975, the current principal and his wife acquired the business in 1993 as a going concern. The practice is located in the third largest English district by population within a highly sought after area, and benefits from being surrounded by excellent transport links.

Type of practice – this is a four-surgery NHS practice. The clinical work is completed by the vendor and his wife in addition to four part-time associates. The freehold premises were to be included within the sale and were valued at £230,000.

Financials – the annual turnover of £717,175 is derived predominantly from the NHS contract worth just under £670,000 for c21,000 UDAs, boasting huge potential to grow the business by implementing private treatments.

Buyer appetite – the practice was advertised to our premier tier buyers only, with nine viewings taking place and a timely sale being achieved.

Reason for sale/incoming purchaser – the outgoing principal and his wife ideally wanted to retire immediately; however, has since agreed to continue working at the practice to ensure a smooth transitional period is achieved as this was the buyer’s first purchase.

Price achieved – £1,255,000 for the goodwill, equipment, fixtures and fittings, which was greater than our valuation.
Practice three
Practice location
– established for over 60 years, the current principal acquired the practice in 2013 as a going concern; however, their plan has changed and are now relocating. The practice is located in a mainly residential area in west Lancashire close to a seaside resort, with local shops and amenities close by. There is also the added benefit of free parking outside the practice.

Type of practice – this is a five-surgery practice – four of the surgeries are currently in use with the fifth surgery available. The practice is currently open Monday to Thursday. Available on a leasehold basis within a detached property that occupies the whole of the ground floor, this practice has lot of potential for further expansion.

Financials – annual turnover of £542,510 is derived through an attractive NHS base of £410,000 over 15,000 UDAs, fee per item and capitation based patients. The practice has huge scope to increase the private turnover by opening for additional days and utilising the fifth surgery.

Buyer appetites – we successfully marketed the practice with the details being sent out to over 500 buyers. Nine viewings took place resulting in multiple offers being placed. Due to the demand of the buyers and various revised offers we were able to reach the vendors expectations through a sealed bid.

Reason for sale/incoming purchaser – the vendor was looking to relocate so wanted to exit the practice on completion, to move forward with their future plans. The incoming purchaser already owned another practice close by, so planned to work between both practices and further expand their existing portfolio.

Price achieved - £985,000 inclusive of the goodwill, equipment, fixtures and fittings, and was greater than our valuation.
Posted by: Dean Barker on

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:

    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 2018. 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.
Your shortlist contents will be included in this contact submission