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Buying or Selling a Dental Practice?

Dental Law Solicitors - LeedsSink your TEETH into our top tips that need your attention long before you consider buying or selling a dental practice:

Buying or selling a dental practice is a key stage of any dental practitioner's career. When you need legal advice, you need people who have been there before, seen it and done it. You need strategic advice, support and direction.

Here are LCF Dental Law's top tips

The due diligence process.

Buyer - The due diligence process is a comprehensive appraisal of a business undertaken to establish the assets, liabilities and to evaluate the commercial potential. It is important that no stone is left unturned. We undertake a full comprehensive investigation of the proposed practice on your behalf.

Seller - The Buyer will raise enquiries into all aspects of your Practice and you will be expected to provide documents to support the answers you provide. Policies, procedures, staff contracts, self-employed agreements, NHS BSA statements, CQC paperwork, accounts and inspection certificates are just some of the paperwork you'll be expected to provide.

Establishing your CQC registration

Registering a dental practice with the Care Quality Commission (CQC) is an important process when buying or selling a dental practice. You will need to ensure that you are correctly registered in accordance with the Health and Social Care Act 2008.

Buyer - The Buyer can choose from the following 3 applications:

Individual - You should be registered as an individual if you intend to practice as a sole trader. Individuals will need to register in their own name and will be responsible for carrying on the regulated activities. Individual applications are suitable for expense share arrangements.

Partnership - A partnership application will be required for two or more individuals. The partnership as a whole, together with each individual partner shall be responsible for ensuring that the regulated activities meet the correct CQC standards.

Organisation - The dental practice should be registered as an organisation if you are a registered company, charity or a limited liability partnership.

The organisation will be registered as the provider of regulated activities.

Seller - Cancellation - As the current registered provider for the Practice, the Seller will be required to cancel their CQC registration in order to allow for the Buyer's application to be submitted simultaneously.

Entering into the Sale Agreement

The sale agreement will contain the key provisions to be agreed between the parties in respect of the property, goodwill, equipment, CQC and employment law matters. It is important that you receive specialist advice on these points.

Buyer - As the Buyer you will need to ask yourself certain questions, is the practice underperforming? Is the equipment in good condition? Do you need a retention in respect of defective treatment? Are the accounts true and accurate? A properly drafted sale agreement will provide you protection against any of the above examples.

Seller - Selling a dental practice in good faith will not be adequate protection for the Buyer. You will be expected to provide promises to the Buyer in the form of warranties and indemnities. You will need to ensure that the Buyer's ability to seek a potential claim against you is limited by timeframes and thresholds.

The GDS/PDS Contract

Dental practices come in all forms, shapes and sizes. We have first-hand experience dealing with private, NHS, capitation and mixed dental practices. Some dental practices may have General Dental Services (GDS) or Personal Dental Services (PDS) contracts with NHS England.

Seller and Buyer

GDS Contract - A GDS contract is held in the name of an individual/partnership and allows the registered provider to add a partner onto the contract. This is how GDS contracts are transferred between the Buyer and the Seller on a practice sale.

PDS Contract - The PDS contract does not allow for a partner to be taken on and are subject to performance indicators. PDS contracts are time limited unlike the GDS Contract and tend to have a higher UDA rate. A PDS contract may contain the right to transfer to a GDS contract at any time subject to certain criteria.

Handing over the keys

Completing a dental transaction is a rewarding process for both parties involved. On the date of completion the legal transfer of the dental practice will take place, with further CQC and NHS England applications to be submitted.

Buyer - With the purchase finally in your grasp you will need to ensure that the final pieces are in place. We will liaise directly with your bank, NHS England, the CQC and the Sellers' Solicitors to ensure completion of the transaction is as smooth as possible.

Seller - With the closing stages of your sale coming to an end, we will assist you every step of the way. We will submit CQC and NHS notices on your behalf and we will ensure that you receive the full purchase price before the dental practice is legally transferred.

Your top tips were written by Nathan Bentley. Nathan is an Associate Solicitor and Head of the Dental Team here at LCF Law.

Nathan has years of experience in acting exclusively for dentists and dental practice owners throughout England and Wales particularly in respect of practice sales and purchases, practice business structures, incorporation and general commercial advice.

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