3 Common Legal Points When Buying or Selling a Dental Practice
Gemma Mintram, a partner at Knights PLC, provides us with her expert view.
There are several issues that regularly crop up when dealing with the sale and purchase of dental businesses and companies. Identifying those issues at the outset and rectify them will avoid any potential impact on delaying the timescales of the transaction.
The main issue is usually that the lease when is not in the correct name. If it is a share sale then the lease should be in the name of the target company. If it is a business sale then it should be in the name of the sellers.
Other issues related to the lease are;
Leases which prohibit charging
Leases which prohibit use as a dental practice
Leases nearing the end of their term.
With regards to the NHS Contract, aside from the usual under-performance issues there are several points to check in relation to the contract which can cause problems in a transaction, for example;
The Provider on the NHS contract not being the seller
The NHS contract is held by a limited company but NHS England inserted a change of control clause on incorporation
The individual shareholders provided a personal guarantee to NHS England when the practice was incorporated and are therefore are ‘on the hook’ indefinitely under the NHS contract.
The main question around the CQC arises when a practice has been incorporated and either the limited company isn’t a registered provider or there is an NHS contract held outside of the company and the providers under that contract aren’t registered with the CQC.
CQC applications are currently taking an average of 3 to 4 months to be approved so it is imperative that, if any new registration needs to be applied for , this has to be done at very beginning of the due diligence process.