The Pitfalls of Using the Naïve – You Don’t Know What You Don’t Know!

Prepare for Dental Practice Finance With Caution

Buying a dental practice is no mean feat and, as such, is not a process that should be taken lightly. To make sure that you’ve got everything covered, you will need to utilise the services of specialist advisers with dental specific experience. Not doing so could leave you vulnerable to the potential pitfalls of practice acquisition and finance, costing you valuable time and money.

Consider all assets

Just consider, for instance, what would happen if you didn’t have the help of a dental specialist broker when working out your affordability? Obtaining lending isn’t just based on how much money you have in the bank, but family money, property and assets too, so unless you have expert advice you won’t know how to calculate your finances and upper spending limit.

You must also remember that securing a loan isn’t as straightforward as taking out a mortgage. You might have two practices worth £450k, but if one of them is not deemed profitable enough to cover all the costs of the business as well as the loan repayments, the initial deposit would be a lot higher than a practice that has the same valuation but higher profitability. Unless you have a basic understanding of how banks assess a practice when calculating affordability, you risk coming away with nothing, wasting both your time and theirs.

Get a dental specialist agent to get the best deal

Unlike a regular broker, a dental specialist agent knows exactly which practices are attractive options to lending banks. Most importantly, they are well placed to help you find a practice practical for you. As such, they can help you narrow down your search to appropriate options within your budget, streamlining the process and minimising the risk of being turned down by the banks.

NHS or private practices

The other consideration that will be taken into account at this point in the process will be the contract type – after all, there is little point looking for a fully private practice if you present yourself to the bank as an NHS dentist. Like your accounts, you need to be able to prove your experience and suitability for the practice, so be sure to put together a detailed CV for the banks evidencing why you are a suitable candidate for your chosen practice.

If you decide that your ambitions are a lot greater than what you can currently afford, it doesn’t have to be the end of the road – with a specialist adviser at your side you can look at ways to increase your upper spending limit. Ultimately, it’s just about getting to grips with your accounts and existing financial responsibilities that affect your lending options. So if you have the equivalent of a Ferrari and penthouse in Mayfair, you might want to enlist a dental broker to advise how this will affect your purchasing capability.

Let us get the best out of your lender

As for knowing which banks to approach, there can be no doubt that a dental broker with extensive experience is best placed to manoeuvre the best results. Indeed, with their knowledge of which banks deal with dental practice transactions, specialist agents can negotiate the best possible offer with the most appropriate lender, decoding confusing financial jargon for you along the way. They don’t get preferential rates, but because of their experience you are more likely to get the funding you want/need.

Of course it’s not just finance where dental experience is essential. Choosing a solicitor and accountant that work in the dental arena is as equally integral to achieving success. Using a dental specialist solicitor will ensure that any pitfalls that might be encountered can be easily avoided, especially when dealing with local area teams or NHS contracts. If you use someone that has limited experience in the field it could cause the whole deal to fall through and could cost you thousands. I have seen it plenty of times where the structure of a business actually renders the practice owner and all of their associates ineligible for the NHS Pension Scheme even though they are still naively contributing. Saving a £1,000 on fees now could cost you £50,000 a year for the duration of your retirement!

In regards to the accountant, a specialist can ensure that the structure of your proposed acquisition is in the right entity. If any mistakes were to occur as a result of inexperience, it would affect your ability to get the lending required.

At DE Finance, we work tirelessly to ensure that your lending is as straightforward and risk free as possible, providing a complete service from beginning to end. We can even recommend reputable dental solicitors and accountants, should you require some assistance. Every decision that you make has an impact on the final result. To ensure that you don’t get caught out, be sure to avoid companies with little or no dental experience – after all, buying a dental practice is complicated enough as it is, why make it more difficult?