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Dental Times - Funding your practice purchase
01332 609318
20 November 2017
Historically, lenders have had very clear credit policies on how they were able to finance clients looking to purchase within the healthcare sector. This meant they were only able support a particular type of client and/or practice. This resulted in red tape and obstacles that needed to be overcome in order to facilitate a loan.

However, more recently, lenders have been given more freedom, which will benefit the sector, allowing for greater financial support. It is our aim, alongside banks, to consequently assist with your business aspirations, making them a reality.

The evolving sector
As such, banks no longer have a specific ‘one size fits all’ credit policy, following guidelines rather than rigid policies, allowing lending representatives to exercise their initiative, providing them with much more movement. Lenders will therefore look at each case on its own merit, really trying to push loan-to-values to 100% unsecured lending in some cases.

This allows lenders to evolve alongside the expanding healthcare sector. Such movements are incredibly exciting news, as it means that the market has really opened up, providing buyers with options that in the past would not have been possible.

How we can help
The scope on lending for a practice purchase has many considerations and variables. At Medifinancial we will contact the banks and building societies on your behalf, in order to secure the best possible deal that fits with your individual requirements.

We have built valuable relationships with the lenders through the years and using our expert knowledge, we are able to present your case to them in the most attractive way, which results in a more positive outcome. We will provide you with whole of market research, allowing us to source the very best deal available to you through our bespoke advice.

What can I expect?
Using the tailored service that Medifinancial provides, you will benefit from our preferential rates, competitive loan-to-values and repayments terms. The rates that we are receiving at present are as low as 1.98% above base and to reiterate, the loan-to-values that we have arranged reach 100% of the purchase price. This alone indicates that this is a great time to purchase as the low rates and high loan-to-values reflects the banks incredibly positive appetite to lend in this sector.

It is often a daunting notion to purchase a practice, particularly if you are a first-time buyer. We aim to provide you with the support needed in order to take that plunge. From the offset, you will be provided with one point of contact in the shape of a financial adviser that will continue with you on your journey of purchasing a practice through to completion and thereafter.

We will assist you with any queries throughout the process of your practice purchase, no matter how significant you believe them to be. As such, we understand the importance that we are easily contactable for you. The advisers at Medifinancial are available until 9pm on Monday-Thursday and 5pm on Friday, ensuring you are able to make contact outside of your working hours so that you are truly able to utilise the service to its full potential.

The adviser will aim to make this experience as streamlined and stress free a possible as we understand how important your time is to you.


Practice One
Practice Location:
located within a densely populated residential area, this practice benefits from ample free parking facilities as well as close proximity to local amenities/shops. The current vendor acquired the practice in 2013 through Mediestates, with the practice established for over 60 years prior to that. Due to the vendor’s emigration plans, the practice was returned to the market in 2016.

Type of Practice: this is a five-surgery mixed practice situated within a converted residential property with plenty of scope for increased chair time and additional space for future expansion. The freehold premises, owned by the vendor, were to be retained with a new 15-year lease created for the incoming buyer. The outgoing principal was generating two thirds of the income, alongside two associates and a therapist.

Financials: total turnover at the practice is £543,000 with £410,000 delivered through a GDS NHS contract. The UDA target of 14,950 produces a healthy UDA rate of £27.52. The remaining income is generated through a £25,000 capitation scheme and £108,000 private fee per item work. Staff costs at the practice are comparably low, which helps secure a strong net profit.

Buyer Appetite: the practice was sold on our general market tier with nearly 6,000 buyers viewing the opportunity via our website, 600 buyers receiving full sales particulars and multiple viewings taking place.

Reason for sale/Income purchaser: despite their plans to emigrate, the outgoing principal was prepared to stay on at the practice in the short term to support a transitional period. The incoming buyer owns a small number of dental practices and was looking to increase their regional portfolio.

Price Achieved: £985,000 inclusive of goodwill, equipment and fixtures/fittings. The transaction took nine months from first marketing to completion.
Practice Two
Practice Location:
established for over 50 years, this practice was purchased by the current principal in 1997 as a going concern. It is located within a city suburb on a busy main road close to other local business and shops.

Type of Practice: this mixed practice has two surgeries and occupies the ground floor of a converted residential terraced property. There is room to expand into the upstairs residential flat if required for future growth. The freehold premises, valued at £215,000, was sold alongside the goodwill.

Financials: the practice benefits from a strong capitation scheme, with the annual turnover of £270,000 derived from 50% capitation, 25% NHS and 25% fee per item income. The small NHS contract is made up of 2,600 UDAs resulting in an average UDA rate of £25.96. The majority of income was generated by the outgoing principal, assisted by a part-time associate to deliver the UDA target.

Buyer Appetite: the practice was sold on our priority tier, therefore multiple viewings and offers were received for the practice.

Reason for sale/Income purchaser: the vendor was looking to retire but was open to working at the practice post-sale for one year if required. The incoming purchaser was a first-time buyer looking to work within the practice.

Price Achieved: £560,697 for the goodwill, equipment, fixtures and fittings and freehold. The vendor received offers above asking price.
Practice Three
Practice Location:
this well-established practice was originally founded in 1927 and was acquired by the vendor in 2010. It is located within a small city within the south of England, close to other businesses and amenities. There is a free public car park directly opposite the practice.

Type of Practice: it is a fully private, two-surgery practice with plenty of room for future expansion. The practice is well equipped with an OPG machine and a recent refurbishment within the main surgery. The detached premises were held on a leasehold basis with a moderate annual rental and six years remaining on the lease. The third-party landlord agreed to grant a new 15-year lease as part of the transaction to assist the incoming buyer with securing bank funding.

Financials: annual turnover of £420,000 is made up of £240,000 fee per item work, £90,000 capitation and £90,000 specialist treatments, including implants and orthodontics. The specialist treatments were being carried out exclusively by the outgoing principal, who was supported by an associate and a hygienist. The cost base at the practice was relatively high, allowing for an incoming buyer to make efficiencies post-sale.

Buyer Appetite: the practice was advertised on our general market, with over 100 buyers receiving full sales particulars and multiple viewings conducted.

Reason for sale/Income purchaser: the vendor owned two discrete practices and was looking to reduce their responsibilities by selling one of them. They were prepared to work on at the practice to deliver the specialist treatments, ensuring stability of turnover post-sale. This was a first practice purchase for the incoming buyer, who was looking to work as the full-time principal.

Price Achieved: £415,000 inclusive of goodwill, equipment, fixtures/fittings.
Posted by: Kimberley Parker on 22 Jun 2017