Buying a dental practice is a significant investment. Conducting thorough due diligence is crucial to ensure you’re making an informed decision and mitigating potential risks.
Here are some essential steps to consider:
- Financial Review:
- Scrutinise financial records: Obtain and carefully review the practice’s financial statements (profit and loss, balance sheet, cash flow) for the past 3-5 years.
- Assess revenue and profitability: Analyse trends in revenue, patient numbers, and profitability. Look for any significant fluctuations or red flags.
- Investigate outstanding debts: Determine the level of any outstanding debts, such as loans, supplier bills, or tax liabilities.
- Review fee structures and patient demographics: Understand the practice’s current fee structure, patient demographics, and payment collection rates.
- Practice Operations Review:
- Assess patient records and systems: Review patient records, appointment scheduling systems, and other operational software. Ensure compliance with data protection regulations (GDPR).
- Inspect the premises: Conduct a thorough inspection of the practice premises, including equipment, dental chairs, and other infrastructure.
- Evaluate staff and their roles: Assess the skills, experience, and qualifications of the existing dental and support staff.
- Review patient contracts and agreements: Examine patient contracts, supplier agreements, and any other relevant contracts.
- Legal and Regulatory Compliance:
- Verify all licenses and registrations: Ensure the practice holds all necessary licenses and registrations from relevant regulatory bodies (e.g., General Dental Council – GDC Care Quality Commission – CQC and NHS).
- Review compliance with relevant legislation: Check for compliance with all relevant legislation, including health and safety regulations, employment law, and data protection regulations.
- Assess potential liabilities: Identify any potential legal or regulatory liabilities that could impact the practice.
- Market Analysis:
- Conduct a local market analysis: Analyze the local market conditions, including competition, demographics, and demand for dental services.
- Assess the practice’s competitive advantage: Identify the practice’s unique selling propositions and its competitive advantages within the local market.
- Evaluate growth potential: Assess the potential for future growth and expansion of the practice.
- Obtain Professional Advice:
- Consult with legal and financial experts: Seek advice from solicitors and accountants who specialise in dental practice acquisitions.
- Engage a dental consultant (optional): Consider engaging a dental consultant to provide independent advice and expertise on the practice’s operations and valuation.
Summary:
Thorough due diligence is critical for a successful dental practice acquisition. Contact Jacobs Legal today to discuss your specific requirements and learn how our expert team can assist you throughout the entire process