Frequently, one side of the transaction does not have a lawyer who specialises in their healthcare sector and understanding the due diligence requirements around a practice sale are complicated and time consuming.
At BHH we have seen and been involved in numerous transactions in our previous lives as bankers and know and understand how important the DD is and how it’s a fundamental part of the sales process. Without the DD the deal cannot proceed. Essentially the buyer needs to know exactly what is included in the sale.
What sellers sometimes forget or potentially do not realise is that without providing the required due diligence the buyers cannot satisfy their bank’s requirements about the practice and that they will not release the loan funds to enable to deal to complete. Having been in the banking industry for many years we know that over the past 5years the amount of due diligence required has increased year on year.
When you bought your practice, I am confident that in view of your profession that Bank’s were more willing to lend without the current level of due diligence but also the money exchanged was significantly less. If you take a step back and think about it, the Bank’s and the prospective buyers are paying a significant amount of money to you for a patient list.
The only tangible assets are the equipment. It is for this very reason that numerous questions are asked and warranties are required to ensure to the best of everyone’s ability what someone thinks they are buying is actually what they end up with.
A lawyer’s due diligence form usually consists of over 100 questions which need to be answered and satisfied by the buyers lawyer and potentially the buyers’ bank’s lawyer too.
BHH will visit you at your practice and go through the list and with your help answer all the DD questions, obtain the information and provide it to your lawyer. By being familiar with some of the obstacles we can ask the next question to your initial answer therefore providing the lawyers with a comprehensive response to their questions.
With this service this will reduce the time currently spent between the lawyers and yourself chasing information and receiving it over a long period of time. This should help keep legal costs under control and speed up the time it takes to sell the practice. If the DD takes weeks opposed to months, it will certainly help reduce legal fees for most.
For dental practice sales, the average practice currently takes 12 months and I have known one take 3 years! If you have made the decision to sell, you really don’t want to be waiting 3 years to receive the sale proceeds! Between the time you agree to sell and actually complete the expectation on you is to maintain income levels to ensure the value does not fall.
Please call Laura on 07500 845184 to have an initial discussion.