Success or failure at sales and acquisitions—What is it going to be?

All the vendor can do is take the right steps beforehand, taking care to note potential pitfalls and how to overcome them. In this article, I look at five common causes that can be the difference between failure and success.

Practice performance
From a buyer’s perspective, proceeding with a purchase in which the practice is underperforming can be very risky, as it makes banks nervous about lending. To ensure a smooth transaction that is completed successfully, a vendor should ensure that the practice continues to perform at the same turnover level as the last set of accounts on which the business was valued.

Leasehold term
Where leaseholds are involved, a failed deal is almost always because of lease length. The reason for this is that purchasers require a lease of at least ten years in order to pay maximum value, so unless an agreeable deal can be reached, a buyer would not be able to continue with the transaction—not least because the lending bank will always require a sufficient lease length. As such, success relies on communication, negotiation and a willing landlord.

Freehold
With a freehold, if there is a problem with the practice that neither party knows about and it shows up during the survey, it can only end one of two ways: the vendor resolves the issue or the sale falls through. Sometimes, surveyors can make issues of items that actually are not that critical and this will often require a second professional opinion or a good mediator to address the issue.

Bank valuations
If a buyer is borrowing money, then his or her bank will almost certainly instruct a valuer to cast an opinion on the value of the practice. This result will dictate how much money the bank will lend the buyer. Without the valuer being provided a marketing history, relevant comparable data and details of all bidding parties, it is not uncommon for the valuation to differ by as much as 20 per cent. For the best results, it is always better to engage the services of an experienced specialist dental broker who can advise on the better bank valuers and provide them with the data they need to ensure a successful end result.

Specialist help
Unless one does one’s homework before embarking on the journey, one runs the risk of ending up in deep water very quickly. For that reason, both vendors and buyers should always seek professional help rather than choosing to tackle the task alone.

As highlighted here, all it takes is one wrong move and a vendor or buyer’s well-laid plans can come unstuck. With the right approach, preparation and organisation, however, a failed transaction can usually be avoided; one simply needs to stay mindful of potential problems that can occur.

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