So, you’ve decided to sell up. Whether it’s been a sudden epiphany or a decision that’s been a long time in coming, it’s worth understanding the process that you’re now entering.
How to find the right buyer for your dental practice
The answer is – as always in life – it depends! Some of this will be under your control and some of this will be determined by the size and desirability of your practice. Detailed below are the three main routes:
Selling to an associate
You already have a dentist (or a group of dentists) working with you currently who have expressed an interest in purchasing the practice from you. This can be particularly attractive if you have a strong emotional attachment with the practice and one of your priorities is to see the culture you have established continue once you hang up your drill.
Clearly this route is dependent upon having enthusiastic associates wishing to step up. You can also run into problems regarding valuations and the lack of competition within the process (more on the valuations later…)
Selling to a corporate buyer
Your practice is big enough or profitable enough (or both) to have the ‘top dogs’ interested. Fantastic! Some quick points to note about this route:
They will often contact you – often through an agent – to see if you are interested in a sale. It can also happen the other way around whereby you make the first move. Either way, one of the big advantages here is that you don’t pay any commission. If they are using an agent to broker the deal, they’ll pay the fee or if you contact them, it’s likely there’ll be no agent involved.
Another advantage is that the corporates often pay the best price as their buying power is greater than that on the independent market. Assuming you are comfortable with selling to corporate (culture point as above) then the main drawbacks are:
– The tie in period. Most corporates want vendors to stay on for 2 years or more post sale. Indeed, a proportion of the agreed sales price could be contingent upon hitting targets post sale.
– The level of due diligence required. The sales process will be stressful in any case but if you’re selling to a corporate, be prepared for a small army of advisors trawling through your finances and documents. So, whilst you may be achieving a better sales price, your professional costs (i.e. legal and accounting) may well be higher as a consequence.
Selling through an agent
For various reasons, this is the usual route with the majority of sales taking place after consultation with an agent. The advantage is that you’ll be getting advice from the companies who deal with these transactions on a daily basis – dental sales are big business! Your agent will be paid a sales commission (often 2.5% of sales value
but this can vary) so it’s in their interests to get you the best deal. They often have great contacts and knowledge of who’s looking in the market at any given time or location. To be fair, they do genuinely remove some of the burden in terms of stress as well. At Robson Laidler, we’ve worked with most of them over the years. We’ve found that some are better than others in specific situations. So, if you wish to lean on our experience, please feel free to do so.
Next steps after finding a buyer
Ok, let’s assume you’ve found a buyer and at this stage, you’re both happy with the proposed price. What’s next?
If it’s a corporate deal or even a large independent deal, you’ll probably be asked to sign the ‘heads of terms’. This sets out the basis for the deal and it’s important you don’t rush into anything here as the clauses noted in this document will flow through to the final contract.
If it’s a sale to an associate or independent, it’s highly likely that your buyer will need to go away and secure the required finance/loan to make the deal happen. One important point here; the bank will need to instruct its own valuer (paid for by the buyer – a chartered surveyor). This valuation will almost certainly come in below the agreed sales price – as surveyors are more prudent than ‘open market’ type valuations. This can cause problems
as the bank will only lend 80% of the surveyor’s value. If the buyer does not have (in cash) the difference between the agreed sales price and the maximum bank lend, the deal could be off, or may need to be renegotiated.
Irrespective as to the background of your buyer, you will be required to produce up to date financial information. Like a lot of small businesses, dental practices often defer the preparation of their annual accounts until later in the year (simple human procrastination!). Given that the whole process is likely to grind to a halt without current financial data, it is worthwhile being on top of this as soon as possible. Certain buyers may not be satisfied with the accounts for the previous financial year and may ask for monthly management accounts. Depending upon the size of your practice, it maybe an idea to consider producing these pre-sale. Dental accountants, like ourselves, would be happy to help.
How dental practice valuations work
Yes, this can be a ‘thorny’ issue and isn’t an exact science. While there are recognised valuation models – such as applying a percentage of turnover or a profit multiplier – few practices align neatly with them without some theoretical adjustment. Some may require tweaks to year-end results to present a more accurate picture of profitability, while others are influenced heavily by the open market, where demand, location, or strategic fit can justify figures that exceed what models alone would support. NHS contracts, for example, can bring a level of predictability that closely resembles a true open market, but even then, strategic value to a buyer may command a premium. Importantly, even where valuation models offer a starting point, there’s significant flexibility in how a sale is structured. Rarely are two transactions the same – each reflects the unique attributes of the practice, the motivations of the buyer and seller, and the commercial realities of the deal. This is why experienced advisers are so essential: not just to run the numbers, but to navigate the layers of judgement and negotiation that sit behind them.
Valuations can be based either on historic performance or projected future earnings – each approach carries its own benefits and risks. For example, if your practice has secured substantial NHS contracts that are due to start in the near future, you may understandably want to factor these into the valuation using forecasted results. However, doing so often leads to more of the sale proceeds being deferred or conditional on performance. Buyers are naturally cautious of paying upfront for anticipated gains, so mechanisms like earn-outs are commonly used to bridge the gap between optimistic forecasts and confirmed results.
Even once a price is agreed in principle, it can come under pressure during due diligence. Buyers may challenge “normalised profits”, question add-backs – such as costs relating to replacing the current owner or one-off expenses – or reassess the chosen profit multiplier if income sources are viewed as less stable or repeatable than expected. They may also query working capital assumptions built into the valuation, leading to further negotiations or price adjustments before completion.
And even if the sale price remains intact, sellers must pay close attention to the warranties and indemnities written into the sale agreement. These clauses give buyers the ability to reclaim a portion of the sale proceeds if unforeseen issues or historic liabilities emerge after the transaction. While standard in most deals, they can represent a material risk if not properly understood and negotiated.
Choosing the right advisers for your dental practice sale
You’ll need to appoint a legal adviser with knowledge in the sector. Feel free to ask us for a recommendation as we’ve dealt with a lot of them over the years. You could obtain three quotes from suitable firms and take it from there. One piece of advice here, don’t just ask for a quote, but some firm commitment on over runs/unforeseen issues (i.e. the final bill may bear no resemblance to the original quote). Working with a specialist dental accountant is also highly recommended. If you’ve been managing on the minimum financial assistance but have a potential sale in the next few years, it’ll be worth switching to a specialist now, in order to have the required information to hand once the negotiating starts. Also, some deals can be structured in ways that can be tax efficient, but in order to maximise this, a lot of planning time is required as structures need to be put in place years before you sign on the dotted line.
If you’re looking at selling a dental practice, get in touch with our team for a no-obligation chat about how we can help – from valuations to tax-efficient planning. We’re here to help you prepare, plan, and achieve the best outcome.