Bupa has announced that it’s set to cut 85 dental practices due to a national shortage of dentists. It’s estimated that the decision will affect around 1,200 members of staff across the UK.
One of the main factors behind the cuts is the unsuccessful drive to recruit dentists to deliver NHS care in many of the practices. The industry, like most in the current climate, has been affected by inflation and the high energy prices, resulting in an increase in the cost to run patient services.
But could this news be of benefit to you? You might have been considering purchasing a dental practice for a while, and with at least 44 of the Bupa practices now becoming available for sale (with 37 being earmarked for permanent closure), you can register your interest with Christie and Co directly, and you will receive more information about the practices from 14th April 2023. It could be your next opportunity!
We’ve caught up with Tom Slevin, Dental Client Services Director, for his thoughts on the decision, what you need to know if you’re thinking of buying a dental practice and how we can help you with your potential purchase.
Let’s hand over to Tom…
Although putting up a good fight, unfortunately the healthcare group Bupa is cutting a huge number of its dental practices, which will affect the employed clinical staff and self-employed dentists. The hard decision was made by Bupa Dental Care due to a number of challenges, including the enhanced pressure to provide patient care whilst dealing with a shortage of dentists’ head on.
However, there could be a silver lining. The 85 practices will either close, merge or be up for sale later this year, which if you’ve been thinking about owning your own practice for a while or expand the size of your dental practice portfolio, it could be time to take that next step.
I’ve listed below some key things you need to consider if you are interested in purchasing a practice, as well as highlighting how we can help with your potential acquisition.
Research comes first
You’ll need to firstly work out which location you would like to buy a practice in and see if there is a practice being offered for sale in this location. As with all dental practice sales, location will make a difference on the asking price. There will be a range of sizes of properties available, with Christie and Co stating 32 of the practices having 4 or more surgeries, so it’s important to make sure the practice you take on will be comfortable for you to manage.
You’ll also want to do competitive research to see how many dental practices are operating nearby. Understanding the footfall within the area can help you scope out how many potential patients the practice could have, and produce opportunities to grow. You also need to consider why Bupa are selling these dental practices (is it just due to staffing issues or are there other issues to consider?) and do you have a plan to turn around the performance at the practice.
Funding
It’s always a good idea to explore funding options from the beginning of any purchase. The earlier you speak to lenders, the more likely you are to benefit, and can gain an understanding of what your budget can realistically be from the offset. Researching funding options can allow you to perhaps leverage buy-to-let properties that you already own, or other assets in order to help reduce your cash deposit load, and possibly enable better rates.
We are coming to the end of the 2022-23 tax year and if you are looking at purchasing a dental practice, the lenders are likely to want the latest accounts and tax return for the 2022-23 tax year as part of their lending criteria. Do ensure you send to us your accounting records as soon as you can in April so these will be available to the lenders.
Back to basics
A business plan for purchasing a practice is key and the simpler is the better. You’ll need to have a clear plan in place before you start any progression of buying a practice, to ensure the process runs smoothly and submit this to the lender.
Your plan will need to cover:
- An executive summary – Summarise key points to help the lender gain an understanding of opportunity ideas for their investment.
- The proposition – What you are intending to purchase, a little bit about your background and if the sale is an asset or a share sale.
- The purchaser (You!) – They need to know about the purchaser, so who you are, your background and how you see the structure of the business you are looking to take over.
- Your vision – This is where you’ll need to highlight your plans once you acquire the business, which will need to include day-to-day management, staffing structure and plans for any new services or charges you want to implement. If you are already carrying our treatments that are not being offered at the prospective dental practice, highlight this and how this will improve turnover, profitability and cash flow.
- Competition and marketing – Outline the local competition you’ll be facing and how you will retain and win patients in the area.
- SWOT analysis – Strengths, weaknesses, opportunities and threats. You’ll need to map out each point in detail to show the lender you have thought about every part of your business.
Can I negotiate?
Ensuring you get the right price for your practice is vital. This means that you will need to carry out due diligence (financial and legal), so you can be confident what you offer is reasonable and that you’re not over paying. Early financial due diligence can be completed by our team. We can look at the last few years financial performance for the dental practice, adjust this with you as the principal dentist and prepare cash flow projections to ensure the dental practice has enough profitability to make the venture worthwhile.
If you are wanting to buy one of the Bupa practices, they are keen for them to be offloaded, which does put a potential buyer in an already strong position. They may also want a quick sale, so if you can move fast, you are in a comfortable position to be able to negotiate- but don’t go over the top. Negotiate reasonably and you could purchase your new dental practice below your budget!
What we can help with
Deciding to buy a practice is a big decision, and it can be scary taking on that much responsibility, especially if it’s your first practice. Whether you’re looking to purchase one of the 85 practices that have recently become available, or you’ve had your eye on another dental practice, at DJH Mitten Clarke (previously Morris & Co), we have helped many clients purchase dental practices throughout the years and can assist with the following:
- Valuation of the dental practice based on the historic financial performance
- Profit and Cash flow projections for the practice
- Optimal business structure for the purchase
- Obtaining finance for the purchase of the dental practice
- Guidance and assistance throughout the purchase process to ensure the deal happens swiftly and efficiently
- Liaising with the solicitors, lender and other professionals throughout the process
Get in touch today
We’ve supported a number of clients over the years in purchasing a dental practice. If you are looking at buying, we can help. To speak to our team on how we can assist, give us a call on 0151 348 840.
