Wright Johnston and Mackenzie Solicitors

Guide to Buying and Selling Dental Practices in Scotland

Buying or selling your practice will be one of the most important events in your career. Whether you are thinking of starting your own practice or at retiring stage, we will provide you with personal, tailored advice. Or, in other words, when advising our clients, we put ourselves in their shoes.

Our healthcare sector team aims to make the experience of buying or selling your practice go as smoothly as possible. In this guide we aim to help you understand the different issues you have to tackle in order to make the sale or purchase of your practice a success.

Buying a Practice

1) The Preparation
Buying a practice is a complicated process; problems are often thrown up during the deal which were not evident from the start. For this reason, it’s important to seek legal advice early on, in order to tackle any issues head on.

Buyer Profile:


If you are an associate in an existing practice and intend to buy another practice, you must consider:

a) The period of notice you need to give the principal of your practice

b) that buying a practice will take time. You may want to make sure that the deal is the real thing before you hand in your notice, otherwise you could find yourself with no practice and no job.

You may be in the fortunate position of being able to acquire the practice you are already working in – this will need careful negotiation with your principal.

You already own another practice

You may be wishing to acquire another practice, or sell your own and buy another. Be aware that timing of the transactions may overlap, and you need to consider whether you have the resources to own two practices at once.

Things to have in mind before you commit to a practice:

• How much notice to the NHS health board do you need to give?

• What finance do you need for the purchase?

If you require bank funding in order to buy your future practice, then we advise you to have this as progressed as possible before committing yourself to buy a practice. Whilst the bank won’t commit without knowing the full details of the practice, you can get an indicator of the availability of the funding that would be available to you. The process of acquiring bank funding is notoriously slow, and could be the cause of a party pulling out of a deal. So the more prepared you are with your bank, the smoother the negotiation will be.

• Do you have any outstanding securities to discharge? You may want to do this so not to slow up negotiation or further funding.

• In order to secure the funding, the bank will require a security over a property (this may be your house, other property, the premises to be acquired or both). We can draft any security documents required and negotiate with the bank on your behalf.

2) Negotiation and Due Diligence
You’ve found the practice you want to buy, next make sure you look at the Scottish NHS health board rules before you get involved in negotiations. When purchasing a practice, you must be aware that:

• You will need a list number before you can operate as a principal in a new practice

• the Seller will need to give notice to the applicable NHS Trust (this is usually 3 months)

• Some trusts will require an inspection of the premises before the sale – this can hold things up


Once you have found the right practice for you, for your own and the bank’s interest, a valuation on the premises and the practice equipment should be carried out.

Due Diligence

Once you have found the right practice, you should contact your financial and legal advisers. We will collaborate with your accountants on the financial and legal due diligence; this is where we ask the seller for all the details concerning the practice, from accounting, to contracts and insurance to leases and repairs.

The Financial DD

This is basically a financial check up on the practice that you are buying. Getting a full set of accounts for the practice is important; the bank will want to see these before committing themselves to funding. It is also important for you to indentify which assets the practice owns and if there are any on hire purchase or lease.

The Legal DD

This is a check up on various issues of the practice. We will be asking the sellers specific questions. The main areas to focus on are:

• on the transfer of any employees, associates,

• Any outstanding contracts,

• property issues – to check the property and commercial obligations that you will be taking on, e.g. if there are any leases, equipment to be assigned, condition and maintenance of equipment, whether you are buying or leasing the premises, an examination of title will need to be carried out

• Patients – check the last NHS report, check if there are any patient complaints

3) Sealing the deal
We will produce a purchase agreement that will cover all aspects of the acquisition. We will negotiate closely with the buyer on issues such as the employees you will be taking on, leases, property, equipment, contracts etc. Here you can also include non-compete clauses, preventing the seller from setting up a competing practice or taking away staff from your practice. These sort of clauses need to be carefully negotiated and drafted to avoid being declared unenforceable.

We will arrange for you to sign all the paperwork, assignations and any leases. Once you have paid the purchase price you will receive the keys. Congratulations, you are now the new proud owner of a dental practice!

We will organise any post completion work for you and organise for you to pay any Land and Buildings Transaction Tax. We can also help you to organise insurance for your premises.

Selling your Practice

1) Preparation
Selling your practice can often take longer than you anticipated, that is why by being well prepared for each step is important to take some of the stress away. It’s important to be organised – an organised seller means an organised practice in the eyes of a potential buyer

We’ve highlighted some points to think about to make sure that you are one step ahead.

1) Do you own your business premises? Will you be selling them along with the practice? If so, you will need to account for this in the price for the sale. If you own your premises, but will be leasing them to the buyer, you need to think about what terms you want in the lease. If you lease your premises, you will need to think about the steps for assigning the lease. You will need landlord consent for this. You should be aware that obtaining consent will take time.

2) Check what period of notice you required to give your NHS Trust – it is usually three months - as that has a considerable impact on the timeframe for any sale.

3) How are you going to market the sale? You need to think carefully whether you intend to sell your practice through a private sale or whether you want to go through a specialist agent.

4) Get your legal and accounting advisers involved so they can guide you through the process.

5) You’ve found a buyer – You want to make sure that your position is protected and as is the information about your practice. Make sure you enter into heads of terms with them and a confidentiality agreement – we can provide this for you.

2) Negotiation and Due Diligence
Due diligence – You will need to carry out a financial and legal due diligence for the sale. This is where the buyer will ask for information from you about the practice and you must disclose this information to them.

Examples of the sort of information that you have to provide would be

• 3 years of accounts for the practice. The buyer may also look for more up to date financial information, including NHS payment schedules.

• Employment contracts for all employees and for their current salaries, other benefits, etc.

• All Associate Agreements and agreements with other self-employed persons

• All licences and insurance details for the property

• Any building warrants and planning permission affecting the property

• If you lease your practice premises, the lease and consent from the landlord will be required.

• If you own your premises, you may also be intending to sell them along with your business – the buyers will want the title deeds relating to the property

3) Sealing the Deal
Once negotiations are complete and everything has agreed, we will produce the business purchase agreement that we will have agreed with the buyer’s solicitors. This document will cover all aspects of the sale. We will consult with you closely on this to make sure that you are happy with the terms and that there are no nasty surprises once the deal is complete.

Now all that there is left to do is to sign the paperwork and wait for the funds. We can arrange for delivery of the keys to the buyer.

All the hard work has finally paid off!