HS Financial Services - Thinking of selling? Ask the right questions
Thinking of selling? Ask the right questions

Thinking of selling? Ask the right questions


When it comes to practice ownership, we are living in a gilded age for many. Owners have a bullish market of buyers from the independent market, smaller group consolidators and the corporates seeking their favour. This is not news anymore! So many sellers/owners have “cashed out” well beyond their expectations financially. What they do not know or may not care to know is what more they could have had if they only had asked the right questions or used an intermediary to ask those questions and expand their market of buyers.


Price, of course, is the primary question to ask your buyer. But there is so much more to consider. 


Once deep into the due diligence following the Heads of Terms agreement you may find yourself wishing you had asked more questions at the onset rather than going deeper into the deal with a prospect that you are increasingly finding to be a poor fit. At this late stage of the game, you may find yourself subject to compromising more on the terms as you get closer to the final deal. Basically, it will seem harder to go back and start the process over than to just stay the course and accept the ultimate outcome, for better or for worse.


Before you even get to price, you need to ask other questions to help select the right buyer. After all, you could have many of them lined up, so why not focus on culture fit, your employee contract, and transition expectations at the onset of discussions also!


What are some questions beyond the basics of price should you be asking?


Most groups have a similar pitch when it comes to winning you over. I am not saying it isn’t true, as most do want to preserve the culture to the extent possible and be the least disruptive to an already proven and functioning team. To understand more fully their likely fit with the culture of your practice, and perhaps to get an idea of how well the staff will adapt to the new management structure, ask the following questions of them:


  • What is your vision for the future?
  • Are you planning on merging or selling to a larger corporation?
  • What is your staff turnover rate?
  • Will my employees’ jobs be secure?


Ask questions to help you assess whether this company truly is about the long haul or if you are being courted to become another part in their cart of practices to roll over at the next, big opportunity. You want to determine if they have a long-term vision that suggests success and longevity of the company, stability for the workforce and preservation of your legacy. It would also be comforting to know the employee turnover rate. If it is high, there could be a rough road ahead for the team during the transition and beyond. And you may have long-term and loyal employees you want to see retained. Make sure you speak up while you are being courted, as otherwise it may be too late.


Your contract


Assuming you will be staying on to work for a while, negotiating the terms of your contract should not wait until late in the transaction. Be certain to understand what is expected of you up front. That would be hours, duties, pay percentages, holidays, and benefits. Ask what resources they can bring to the table to lighten your load. You also need to know that the management structure after closing will be there to support you and your activities, and that they will provide sufficient capital investments in equipment and technologies to support the standard of care you expect. Understandably, most consolidators will need you to stick around for a while. But life circumstances can change dramatically. What happens if you find you cannot continue working? Illnesses, severe burn-out, or irreconcilable conflicts in the workplace could override your ability to stay on. Do your homework up front. Ask to see their basic associate contract before you agree the deal.


Is the initial offering the final price?


Seems like this should be a no brainer but putting the suitor on the spot early in the game just may flush out how certain you can be of getting what they agree to pay, or if they may use due diligence as a process to adjust their offer as you get deeper into the process. If a joint venture or equity rollover structured purchase is the deal, you will want to ask how the earnings will be calculated to determine your part of the profit. Is there a management fee subtracted from the earnings calculation? Will there be a tagalong right to be bought out at the same multiple the company gets if a sell to a new private equity firm takes place?


With so much to keep track of, navigating the intricacies of a corporate purchase of your practice requires the close attention and knowledge that an experienced team can bring to the table. In most cases, this is the first and only transaction of this type that you will be engaged in during your careers, and you are selling an asset they may have spent decades building. A strategic approach with a partner in your corner knowing what and when to ask will result in the best outcome.


Having brokered 100s of transactions over the last decade, MediEstates is in front of the industry when it comes to facilitating practice purchases. We offer a wealth of knowledge to help you ask the right questions, at the right time, of the right buyer.


If you are interested in finding out more, please contact the MediEstates team on 01332 321692, info@mediestates.co.uk or visit www.mediestates.co.uk


Posted by: Maja Thompson 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.
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