Dental Finance 2019 by Professional Dentistry

PROFESSIONAL DENTISTRY PRESENTS...

A GUIDE TO DENTAL FINANCE VOLUME 1

This publication is accredited by Erica Kilburn from EK Communications Ltd (EKC)

WHEN I GROW UP I WANT TO BE A DENTIST SO I CAN HELP PEOPLE SMILE As a dental professional, we know that you’re in constant demand and it can be difficult to find time to consider planning for the future, particularly when it comes to pensions. Your local Wesleyan Financial Services Consultant can support you in really understanding your personal pension and NHS Pension Scheme.

CONTACT US TODAY 0800 294 8862 financialreview@wesleyan.co.uk Please quote the code 1000378 Financial advice: retirement planning • insurance • investing • funding Advice is provided by Wesleyan Financial Services Ltd. ‘WESLEYAN’ is a trading name of the Wesleyan Group of companies. Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority and is wholly owned by Wesleyan Assurance Society. Wesleyan Assurance Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Incorporated in England and Wales by Private Act of Parliament (No. ZC145). Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Fax: 0121 200 2971. Telephone calls may be recorded for monitoring and training purposes. DE-AD-1 11/18

Low Rate Finance Low rate Funding Dental Equipment Equipment

Digital Equipment • PracticeDigital Refurbishing • Practice Purchase Refurbishment • Let Buy to Mortgages Residential Mortgage • Tax Loans www.aspiredfinance.com • Cars

Contents... This publication is accredited by Erica Kilburn from EK Communications Ltd (EKC) 1 Patient plans.................................................................................... 4

5 Buying/Selling................................................................................. 30

Patient Plan Direct - Pursue happiness and fulfilment in

Price Bailey SCF Piece - Dental Journal................................... 30

2019 with Patient Plan Direct..................................................... 4

Luke Moore - Back to basics â&#x20AC;&#x201C; buying and selling a

What Should Dentists Consider When Implementing Patient

dental practice........................................................................... 33

Payment Plans?.......................................................................... 7

Buying a practice - Getting started......................................... 33

More Choice For Patients, Regular Income For Practices..... 7

The legal considerations of the acquisition process.............. 34

Flexibility....................................................................................... 7

Selling a practice - Planning your exit...................................... 34

Going to market......................................................................... 35

Costs............................................................................................. 8

Sale process................................................................................ 35

Reputation................................................................................... 8

The fundamental principles....................................................... 35

Range of Products...................................................................... 8

Ease of Use For Patients............................................................. 8

Administration............................................................................. 9

Additional Features.................................................................... 9

Final Thoughts.............................................................................. 9

2 Pensions............................................................................................. 10

Wesleyan - Pension planning for dentists................................. 10

Pension planning: The importance of getting specialist

financial advice for dentists...................................................... 11

What you need to know about pensions................................ 13

So, what is a pension?................................................................ 13

How do pensions work?............................................................. 13

How do pensions affect my income?...................................... 14

When can I access my pension?.............................................. 14

Changes to pensions for 2018................................................... 15

Prepare for the future................................................................. 15

3 Tax ......... ............................................................................................. 16

Leyton - Driving dentistry forwards............................................ 16

Michael Lansdell - Embrace tax planning for a

wealthier future........................................................................... 19

Options for practice owners...................................................... 20

Keep it personal.......................................................................... 21

4 Insurance.......................................................................................... 22

Dentists Provident - Top tips for stress prevention................... 22

References.................................................................................. 23

Richard Lishman - Cover all bases............................................ 26

Practice Insurance..................................................................... 26

Property Owners Insurance....................................................... 26

Practice Overheads / Locum Cover........................................ 27

Medical Indemnity Insurance................................................... 27

Income Protection...................................................................... 27

Critical Illness............................................................................... 28

Life Insurance.............................................................................. 28

Take your time............................................................................. 28

6 Patient Equipment Finance........................................................ 36

Aspired Finance - What are your requirements when

securing Finance?...................................................................... 36

Dental Equipment Finance - How to Expand or Renovate

Your Practice............................................................................... 39

Choosing a Finance Option For Your Practice....................... 39

Unsecured Small Business Loans............................................... 39

Secured Business Loans.............................................................. 39

Hire Purchase Agreements........................................................ 40

Leasing......................................................................................... 40

Invoice Factoring........................................................................ 40

Buying New or Used Dental Equipment................................... 40

Advice For Securing a Dental Equipment Loan..................... 40

Proving Your Creditworthiness................................................... 41

Create a Business Plan............................................................... 41

Look For a Specialist Lender...................................................... 41

Final Thoughts.............................................................................. 41

7 Valuations......................................................................................... 42

Valuations of dental practices; a combination of science and art......................................................................................... 42

The Relevance of Practice Valuations in the Legal Process.45

How Much is Your Dental Practice Worth?............................. 48

Art or Science?........................................................................... 48

Goodwill and Multiples - What Do They Mean?..................... 48

What is EBITDA?........................................................................... 49

Selling a Dental Practice - What You Need to Know............. 49

Instruct a Dental Specialist Solicitor.......................................... 49

Arrange a Valuation.................................................................. 49

Take Care of Due Diligence...................................................... 50

Property Paperwork.................................................................... 50

Final Thoughts.............................................................................. 50

Chapter 1 PATIENT PLANS

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Patient Plan Direct - Pursue happiness and fulfillment in 2019 with Patient Plan Direct / What Should Dentists Consider When Implementing Patient Payment Plans?

Pursue happiness and fulfillment in 2019 with Patient Plan Direct If you are looking to make 2019 your most successful year yet, you might want to investigate patient plans. Patient plans offer a simple and cost-effective way for patients to pay for their dentistry via a monthly payment system. However, choosing a plan provider can seem complicated. One way to decide what’s best for you and your patients is by carrying out a costbenefit analysis. As The Economist tells us, it is a ‘weighing scale approach to making business decisions: all the pluses (the benefits) are put on one side of the balance and all the minuses (the costs) are put on the other. Whichever weighs the heavier wins.’ To apply it to patient payment plans, start with this question – do you really know what you are paying for? For example, some plan providers offer extra services beyond the core of plan administration, promotional material and plan-related training. Do you know what they are? If not, you need to find out. If so, are you making full use of them? What you might call ‘optional’ access to extra services is

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included in the price you pay, so if you aren’t using them to their fullest you aren’t getting value for money. Lower cost, long-established and trusted providers such as Patient Plan Direct may be able to provide you with more value. Simply by not paying your plan provider for frills you don’t need, but still having access to expert advice and support as required, your practice life can be transformed. If you are looking to simplify your practice life and would like to find out how a move to Patient Plan Direct can help your practice run its patient plans for less, please visit www.patientplandirect.com or call 0344 848 6888.

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In a world of uncertainty, why over-complicate anything else?

Switching plan provider doesn’t need to be complicated.

Patient Plan Direct gives you all the expertise and support you need, at less cost to your practice. Simple. Why pay for anything more?

How much could you save over the next 5 years?

Switching plan provider doesn’t need to be complicated.

Patient Plan Direct made it really easy for us to switch and it was cost effective. They've been really great to work with.

Volume of plan patients

Approx savings when switching from...

Denplan

Patient Plan Direct gives you all the expertise and support 250 £30,000 £8,500 £16,000 you need, at less cost to£53,000 your practice. Simple. £18,500 500 £18,500

Dr Daz Singh - Ollie & Darsh

(SimplyHealth Professionals)

1,500

£102,000

Practice Plan

DPAS

£60,000

£28,500

Why3,000 pay for anything more? £171,000 £126,000

£61,500

info@patientplandirect.co.uk | www.patientplandirect.co.uk | 0344 848 6888

How much could you save over the next 5 years? Approx savings when switching from...

This publication is accredited by Erica Kilburn from EK Communications Ltd (EKC)

What Should Dentists Consider When Implementing Patient Payment Plans? One of the most difficult conversations that can occur in the dentist’s practice doesn’t always concern the treatment itself, but rather how the patient is going to pay for it. The cost of some treatments can be high and many patients may not be able to afford to pay for their treatment in one go. This may lead to them putting off treatment and the practice losing revenue. What’s required is a way for patients to not only have access to the best treatment available but to manage payments in a convenient and affordable manner.

More Choice For Patients, Regular Income For Practices Partnering with a patient payment plan (PPP) provider can not only lead to financial benefits for patients, but for practices, too. Patient payment plans (PPP) offer a flexible, affordable and accessible way for existing patients to pay for their treatment and can be developed alongside existing marketing and branding to attract new patients. The way these plans work is simple; payments for routine treatment can be spread with affordable monthly payments that eliminate unexpected dental bills and which typically cover things like routine checkups, hygiene visits and any restorative treatment that may be required. However, it is important that dentists choose the right PPP provider and a plan that their patients can trust. Get this decision wrong and it could mean extortionate fees for the practice, disgruntled patients and a tarnished reputation. The good news is that there are many dental plan providers offering PPP products that can provide an alternative payment path of patients and open up new regular income streams for dentists. In this article, we’ll take a look at some of the factors that can help dentists to not only make the right decision, but to choose a plan that provides long-term stability.

Flexibility When choosing a provider, it is essential that the dentist still has complete control over the plans they offer their patients. For example, no provider should dictate pricing, features or benefits that the practice should offer its patients. This should solely be down to the dentist’s discretion. However, the provider should offer support

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and advice when and where it is required, especially where this is the first time a patient payment plan has been implemented. Dentists should also look out for plans that allow them to choose how many and which patients to offer a payment plan to. For example, some dentists may only want to offer PPP products to their NHS patients.

Range of Products There are many different types of PPP products on offer today. Dentists should look for a provider that offers a broad selection of plans that are suited to the individual requirements of patients. In addition to basic plans that will cater to the needs of most patients, dentists might also want to consider patient plans for children and plans that cover emergency treatment and hygiene visits. The more choice patients have, the more likely they are to take up a plan.

Costs Of course, PPP providers need to make a profit, too. With fee structures differing quite significantly between providers, it is essential that dentists understand the true cost of implementing a plan and any ongoing costs. Most plans are charged on a perpatient basis making it easy to calculate costs as new patients join the scheme. By comparing prices between providers, dentists can get an idea of the ongoing fees for using payment plans and whether this type of solution will be a viable option.

Reputation Reputation is everything when offering PPP solutions to patients, especially if choosing a white-labelled product that will be built and marketed under the dentistâ&#x20AC;&#x2122;s brand rather than that of the provider. If patients experience any problems with their payment protection plan, they will automatically associate the product with the dentist and this could be bad for business and profits.

Ease of Use For Patients Weâ&#x20AC;&#x2122;re living in modern times where technology is king and customers expect to be able to access the services they need at the touch of a button. A plan that requires filling in lots of forms manually could put patients off completely. Fortunately, many PPP providers offer plans that give patients the option to sign up via a paper-based or online process in a matter of minutes. Many also offer dentists the ability to add online sign-up capabilities to their website, ensuring the entire process is seamless.

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Administration A good PPP plan will offer a real-time platform that provides full control and visibility of patient details, allows plans to be changed and added at the touch of a button and which is available across both static and mobile devices. Telephone and online support should also be available in the event of a problem with a patientâ&#x20AC;&#x2122;s plan or the platform itself.

Additional Features Like any new software implementation, patient payment plans may require staff to be trained on the new system. Dentists should look for a PPP provider that offers firstclass training, support and advice to ensure a smooth launch and ongoing success. Some providers also offer reduced rates on clinical training and CPD events.

Final Thoughts For the forward-thinking dentist practice that is looking to deliver exceptional patient experiences that boost both reputation and revenue, a patient payment plan can be a wise investment. Given flexible ways to pay for their treatment, patients will have better access to the treatment they want and need and will be more likely to choose a practice offering a patient payment plan over a practice that requires full payment for procedures.

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Chapter 2 PENSIONS

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Wesleyan - Pension planning for dentists /Richard Lishman - What you need to know about pensions

Pension planning for dentists A pension means different things to different people, but technically, a pension is a tax efficient wrapper in which you save for your retirement, which when you come to retire will have accumulated a value and will then provide you with a benefit. These days there is increased flexibility with pensions, for example, you can work and receive pension benefits if you are over 55 if you choose to, and you can choose how and when you access the money you have saved in personal pensions (depending on the rules of the pension schemes you are a member of). As a UK dentist, it is likely you are trading as self-employed or as a director of your own limited company. This means itâ&#x20AC;&#x2122;s important that you understand all options & sources available to you; be it personal pensions, NHS pension or other savings & investments. Understanding how the biggest governmental pensions reform in decades and the major NHS Pension Scheme changes affect you is crucial as you plan for your retirement.

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Pension planning: The importance of getting specialist financial advice for dentists Key areas to consider are: •

Understanding your NHS Pension Scheme benefits

•

How and when you take any personal pensions held

•

Lifetime and annual allowance implications

•

Associated saving and investment options

•

Potential income and expenditure considerations

The prospect of retirement can often seem a long way off; however, the sooner you begin to put plans in place the better chance you have of building a retirement future that will work for you and the lifestyle you desire in later life. That’s where we can help. To arrange your no obligation review with your local Wesleyan Financial Services Consultant, call 0800 294 8862 or email financialreview@wesleyan.co.uk, quoting code 1000378. Advice is provided by Wesleyan Financial Services Ltd. ‘WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority and is wholly owned by Wesleyan Assurance Society. Wesleyan Assurance Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Incorporated in England and Wales by Private Act of Parliament (No. ZC145). Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Fax: 0121 200 2971. Telephone calls may be recorded for monitoring and training purposes.

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This publication is accredited by Erica Kilburn from EK Communications Ltd (EKC)

By Richard Lishman

What you need to know about pensions Contrary to belief, pensions are something that everyone, not just the elderly, should know more about. Unfortunately, many people tend to ignore their pension and simply “go with the flow” rather than really delving into what these plans mean for them. However, this is a mistake and by getting to know more about your pension, how it affects you and where your money is going, you can soon see what you can do to better prepare for the future.

So, what is a pension? Simply put, a personal pension is a tax-free sum of money that can be paid into by you, your employer and sometimes the government in order to ensure you have money to live off of when you reach retirement. There are many different types of pensions, including workplace pensions, personal pensions, stakeholder pensions and more. These are usually defined as either private or state pensions, with state pensions offering limited financial support in old age, whilst private pensions allow individuals to build much larger funds for retirement. For the majority of people some of these different pension schemes won’t be accessible (e.g. small self-administered pension schemes), however they are useful to know about, especially if you own your own business as people in these situations can benefit from their bespoke nature.

How do pensions work? Most pensions are funded by individuals paying in a portion of their monthly salary each pay date until they choose to retire. If you’ve opted into a workplace pension, your employer will contribute a certain amount of money too. For example, in

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a typical defined contribution pension scheme, a pay in of £40 per month by you would be joined by a £30 sum from your employer. With tax relief from the government earning you an extra £10, this means your total contribution to your pension pot would be £80 for the month. But what is tax relief? As pensions are tax-free it means that the government will add to your monthly contributions if you pay income tax. Even if you don’t pay income tax you may receive monetary contributions from the government if your pension scheme uses ‘relief at source’ as this means that your pension supplier will add tax relief to your pension at a basic rate.

How do pensions affect my income? Perhaps the most important thing to remember about pensions is that they do have a significant affect on your monthly income. Effectively a percentage of your wage will be invested and unable to be spent, and this will depend on your yearly income and how much income tax you currently pay. There are several different salary brackets for this. Those who earn up to £11,850 do not have to pay income tax and fall under the Personal Allowance band. Upwards from that, the Basic Rate band includes anybody who earns £11,851 – £46,350 and this section of earners will be taxed 20%. One step up from this is the Higher Rate band that encapsulates anyone earning £46,351 – £150,000 per annum – these individuals are subject to income tax of 40%. Above this band this is an Additional Rate, and anyone who earns over £150,001 per year is taxed 45%. These bands are different in Scotland. As such, it’s important to budget accordingly in order to ensure that you can continue paying into your pension without affecting your quality of life – especially if a job promotion or new career means you will be moving between bands. This will also allow you to pay more than the minimum amount into your pension, if you deem it necessary. This is a wise idea as the more you pay in, the larger your pot will be when retirement age comes around.

When can I access my pension? Since the 2014 Budget many pension schemes allow people to access them once they reach the age of 55. This means that you will be able to access the funds that you have saved up during your years of paying in, and start to use them as a boost in income. However, since 2010 state pensions have been faced with some radical changes.

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Until 2018, state pensions allowed people to take them at the age of 65, however this is currently under review. Depending on your year of birth and gender, pension ages have now increased, and these usually vary between 65 and 68 years old.

Changes to pensions for 2018 The 2018 tax year brought a number of changes to pensions that people should be aware of. The first is that state pensions have increased by 3%. This means that people who qualify for the full state pension will receive £164.35 each week and an annual income of £8,546.20. This is good news for people who are reliant on this money as it means they will have more capital to work with on a weekly basis. Secondly, the Lifetime Pension Allowance has increased. Though people can still only pay £40,000 into their private pension per annum, there is now a higher limit on the total amount you can save tax free, and you can now invest £1,030,000 in a lifetime. Any money saved in pension plans that exceed this are subject to extra tax charges. Thirdly, auto-enrolment schemes have increased the minimum percentage that workers have to pay into their pensions if they have a workplace pension scheme. Contributions have automatically risen from a minimum of 1% to 3%. This means that for anyone paying the smallest 1% before, they will now have to triple the amount they put into their pension fund. Employers too have seen their contributions increase, and they have now got to provide 2%. This is a good change for people who find it difficult to contribute extra into their pension scheme, as employers need to provide more money which means you will have more capital available in the future. These figures are set to rise again in the coming 2019 tax year, and minimum employee contributions will possibly rise to 5% with employers adding a further 3%. This will hopefully help people avoid retirement shortfall.

Prepare for the future Pensions are an important part of planning for the future. By understanding how they work, what you contribute and how they are changing, you can set yourself up for a comfortable retirement with ease. For more information please call 0845 345 5060, 0754 DENTIST, email info@money4dentists.com or visit www.money4dentists.com

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Chapter 3 TAX

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Leyton - Driving dentistry forward – “How dentists are booming with their R&D Tax Credit revenue” / Michael Lansdell - Embrace tax planning for a wealthier future

Dentists up and down the UK are drawing on an important source of revenue to support Britain’s growing innovation hub Last year, British businesses claimed a total of £3.4bn R&D tax revenue from HMRC, an increase of more than 20% from the year before and double the year before that. But where does this money go? and what kind of impact does it have on small businesses? As Leyton has explored new fields and developed new insights into unclaimed-for sectors, the science of dentistry has been a prominent growth area for the firm Geoff Halligan, founder and managing director of GS Halligan, a small dental laboratory in Birmingham, founded his business 40 years ago. He was unaware that the scheme existed before a member of Leyton’s team reached out. “I’d never even heard of [the R&D Tax Credit],” he says. “HMRC do not advise you about it, my accountants didn’t think it was applicable to me.” The revenue was a “godsend” for Geoff. Having made some significant investments into eleven Zfx machines, he needed to put his own finance on the line.

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“I had to plough a lot of money into the business”, he says. “It affected a lot of personal aspects of my life.” Delivery of the funds lifted a burden that had been weighing on the whole business. “The level of money received was fantastic,” says Geoff. “It sorted out many of the bills we needed to pay. I don’t know what we would have done if the money hadn’t come. We would have unquestionably fallen behind.” Evolutio Care Innovations, a dental healthtech start-up based in Henley, has been a significant benefactor of R&D Tax Relief and have now expanded their UK operations to Ireland. James Syrett, COO of the firm, says: “It’s given us the option to look at new opportunities to innovate.” The revenue generated from the scheme has effectively funded seven new developer roles in their Irish hub as the firm looks to evolve and improve its operations. “We wouldn’t have the team out there with-out the R&D Scheme, but now we do, we can move faster to carry on our innovation journey.” Leyton UK makes roughly 8% of the UK’s claims and is principally focused on claims which have values of more than £20,000. “For us the most important element is to make the claim process efficient and robust,” says Leyton’s head of consulting Radeep Mathew. “Our team of 70 consultants from their respective technical and financial backgrounds follow a best in class methodology which enhances revenue, reduces time and importantly risk.” Ultimately the advantage you get with Leyton is 21 years’ experience and a qualified and experienced financial andtechnical consultancy team specialised in the dental sector, and its sub-sectors. To find out how much you could receive back, visit www.leyton.com and call 020 7043 2300 to speak with the team.

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By Michael Lansdell

Embrace tax planning for a wealthier future “Nothing can be said to be certain, except death and taxes,” wrote Benjamin Franklin in 1798. Although attributed to Franklin, the phrase actually originated some years before with the earliest appearance in 1716, according to sources. History lesson aside, the obligation to pay our taxes has been a gripe for over 300 years, then. We all work hard for the money – often during long, stressful hours. Of course, in the dental field the rewards are enormous and not only financial. Great dentistry and the job of motivating patients to practice daily preventive care really can change lives. Who needs HMRC, with its ever-changing rules, making life difficult? Taxes aren’t the most appealing topic. If you own a dental practice, or are an inspiring practice owner, business management and tax planning isn’t something that would have been taught at dental school, either. HMRC has always had a rather unfortunate image too; that it’s institutionally hostile with the slightly sinistersounding ‘Taxman’ who just wants to take our money. As taxes are inevitable, though, it’s time to be positive about how you can make the system work for you, while remaining compliant with the law. If you arm yourself with the right resources, you will be able to minimise your tax and maximise your wealth. You can plan for the future too, including taking care of yourself and your loved ones. Let’s face it, there will be a whole range of people that you would rather give your hard-earned cash to other than HMRC! With a practical and on-going tax mitigation plan, this is totally possible. And if you are a business owner, good tax structures will help it to survive, grow and truly thrive.

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Is it time for an early Spring clean? With plenty of time before the end of the financial year, why not set about sorting through your finances – personal and business – looking at how you pay tax and where opportunities for mitigation may lie. Get organised with the help of a great accountant, who can consider things objectively and get you up to speed with changes to the law, or changes that are on the horizon. It is incredibly satisfying to know that you are in control. With an open mind, and with the help of an expert who understands the dental industry, you may realise that a re-structure of your tax planning is overdue and that you are happy to switch things up. An early Spring clean will give you a chance to review your processes for organising financial matters too. One reason to blitz your systems and ensure that they are in impeccable order is because HMRC is committed to becoming fully digital by 2020. Making Tax Digital (MTD) outlined its vision in 2015, heralding the end of the annual tax return – once the roll-out is complete – so that taxpayers will be able to file, pay and update information relating to their digital tax account whenever it suits, enabling HMRC to process as the data comes in. MTD is a confident step forward for streamlining tax-related admin; errors won’t remain on file longer than is necessary and the wait for repayments, for example, will be shorter. Ultimately, a fully digitalised system that operates more closely to real-time will give the user a clear and current picture, allowing them to plan ahead better.

Options for practice owners The business environment is changing – which MTD recognises – and rolling with it will keep yours running efficiently. Getting sorted now will mean you can make any modifications to your processes in good time, so the transition is smooth. Maybe it’s time to go paperless? There is some fantastic, user-friendly software available. Structuring your business effectively from a tax perspective – whether you have been running a practice for year, or are just starting out – is essential. Think of it as constantly looking for compliant ways to minimise tax exposure in order to maximise your business and personal funds. There may be some tax-deductible business expenses you are not aware of, for example. In 2020, Corporation Tax is due to be cut to 17 per cent – is it time to consider incorporation? Use all the resources available and you can breathe new life into your practice, as well as help to bolster its defences against economic instability.

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Keep it personal When your business is tax efficient, you can manage your personal wealth better. It goes back to the people and places you would rather give your money to than HMRC – for most people, this includes their retirement fund. When it comes to income tax, knowledge is power and timing is often key. The personal allowance for income tax is due to rise in 2020, to £12,500 (basic rate) and £50,000 (higher rate), for example. At time of writing, the prospect of a no-deal Brexit, and the short and long-term repercussions of our (still scheduled!) departure from the EU in March 2019 are at the forefront of most business owners’ minds. What will a turbulent time ahead mean for taxpayers? The UK economy certainly gets the bulk of its tax revenues from top earners. However, if things reach a state of serious flux, the top earners have the most options for their next move, which could include disposing of assets, such as a business or property. There are changes ahead regarding property tax; pensions tax reform is back on the table as well. The impact of any Capital Gains Tax also need to be taken into consideration when putting together an efficient business and personal tax structure. Your working life may be dedicated to providing excellent high-quality patient care, but a secure future for yourself and your loved ones is high on every dental practitioner and practice owner’s agenda. Great tax planning will allow you to maximise all the benefits you deserve, which includes enjoying peace of mind knowing that you are making the most of your hard-earned pennies. Taxes are inevitable, but with a positive approach and the right advice, planning can be painfree. You might even enjoy it, too – yes, really! To find out more, call Lansdell & Rose on 020 7376 9333, Or visit www.lansdellrose.co.uk

Wikipedia. Death and taxes (idiom). Link: https://en.wikipedia.org/wiki/Death_and_ taxes_%28idiom%29 (accessed October 2018).

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Chapter 4 INSURANCE

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Dentists’ Provident - Top tips for stress prevention Cover all bases

As a dental professional your physical and mental health and wellbeing are paramount to be able to do your job and look after your patients. Dentistry is widely considered to be a stressful profession. You work in the confinement of a small clinic, meeting the health needs of anxious patients with high expectations, dealing with increasing regulation, all on top of balancing your family and other commitments before even thinking about having a social life. Stress is part of everyday life, it can drive us, motivate us and give us the energy to fit it all in, but too much of it could cause us harm.1 Follow these simple tips to manage stress: 1.

Have some ’down time’ away from dentistry: read a book, go for a run,

watch a film, find a new hobby, take a dog for a walk, have a relaxing bath,

listen to music or get more sleep - just find time to take a break 3,4

Get outdoors: whatever the weather, being in nature has been shown to

reduce levels of anxiety, stress, and depression 4

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Exercise: whether it’s a country walk or doing a high intensity fitness session,

exercise produces endorphins, which can calm anxiety and lift your

mood 5,3,4

Try something relaxing: yoga, tai chi, the Alexander Technique, meditation or

mindfulness 4,3,6

Be more proactive: some people try more structured approaches for stress

relief, such as computer or internet based cognitive behaviour therapy (CBT)

or online counselling. The NHS provide a free confidential service.3,7

Mental health problems affect one in four people in the UK and can present themselves at any age.8 Last year Dentists’ Provident paid over £650,000 in claims for psychiatric issues so remember prevention is better than cure…10

References 1.

https://www.mentalhealth.org.uk/a-to-z/s/stress

https://bda.org/dentists/policy-campaigns/campaigns/tackling-stress-in-

dentistry

http://www.nature.com/bdj/journal/v219/n8/full/sj.bdj.2015.817.html

https://www.mind.org.uk/media/1993364/how-to-manage-stress_2015.pdf

https://www.nhs.uk/conditions/stress-anxiety-depression/understanding-stress/

https://www.nhs.uk/conditions/stress-anxiety-depression/reduce-stress/

https://www.gov.uk/government/news/connecting-with-nature-offers-a-new-

approach-to-mental-health-care

https://www.mind.org.uk/media/2976123/how-to-improve-your-wellbeing-

through-physical-activity-and-sport.pdf

http://www.tgogc.com/

http://www.parkrun.org.uk/

https://www.yogajournal.com/poses/yoga-by-benefit/stress

http://www.alexandertechnique.co.uk/benefits

https://www.tm.org/benefits-of-meditation

http://www.helpguide.org/harvard/benefits-of-mindfulness.htm

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http://www.helpguide.org/articles/stress/relaxation-techniques-for-stress-relief.

htm 6. www.iesohealth.com 7.

https://www.mind.org.uk/information-support/types-of-mental-health-

problems/statistics-and-facts-about-mental-health/how-common-are-mental-

health-problems/#.W9h2eWdLHct

http://www.stress.org.uk/world-mental-health-day-2018-young-people-and-

mental-health-in-a-changing-world/

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5457790/

https://www.researchgate.net/publication/317190467_Depression_anxiety_

and_stress_in_dental_students

http://www.scielo.org.za/scielo.php?script=sci_

arttext&pid=S0011-85162017000100005

http://www.jdentaled.org/content/74/8/836

DPS claims stats

This article is intended for general information only, it is not designed to provide financial, health or other advice, nor is it intended to make any recommendations regarding the suitability of any plans for any particular individual. Nothing in this article constitutes an invitation, inducement or offer to subscribe for membership or additional benefits of Dentists’ Provident. No responsibility or liability is assumed by Dentists’ Provident or any copyright owner for any injury or damage to persons or property as a consequence of the reading, use or interpretation of its published content. Whilst every effort is made to ensure accuracy, Dentists’ Provident, the authors, Editors and copyright owners cannot be held responsible for published errors. Dentists’ Provident exercises editorial control only over material published and/or produced by it. No responsibility or liability is assumed by Dentists’ Provident for any articles produced or reproduced in third party publications and/or websites. The views or opinions expressed do not necessarily reflect views of Dentists’ Provident or copyright owners. Inclusion of any advertising material does not constitute a guarantee or endorsement of any products or services or the claims made by any manufacturer.

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Suzie Smith Dentist

Suzie was excited about starting her associate job in a private practice early last year. On her way home one evening she slipped on some black ice and fractured her hip. After months of treatment and rehabilitation, Suzie is looking forward to restarting work next week. But tonight is all about catching up with friends at her favourite restaurant.

When your life stops due to illness or injury, your world doesn’t have to. At Dentists’ Provident, we understand the impact illness or injury can have, not just on your health and wellbeing but on your work and lifestyle as well. An illness or injury can put your life on hold at any time and that’s where we come in; supporting you through the tough times until you get back on your feet. With over a hundred years’ of experience in caring for dental professionals just like you, our members trust us to provide them with peace of mind when they need it most.

Protecting your lifestyle. Securing your future. To find out more visit our website at www.dentistsprovident.co.uk / www.dentistsprovident.ie or call our member services consultants on 020 7400 5710 Dentists’ Provident is the trading name of Dentists’ Provident Society Limited which is incorporated in the United Kingdom under the Friendly Societies Act 1992 (Registration Number 407F). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom (Firm Reference Number 110015) and regulated in the Republic of Ireland by the Central Bank of Ireland for conduct of business rules (Firm Reference Number C33946). Calls are recorded for our mutual security, training and monitoring purposes.

This publication is accredited by Erica Kilburn from EK Communications Ltd (EKC)

By Richard Lishman

Cover all bases Working in dentistry, you can never have enough financial protection and assurance, both personally and professionally. This is especially true if you own a dental practice; though associates too should be covered against all eventualities. Of course, in order to be fully protected, you need to cover all bases – and that means taking out multiple policies. This process can be extremely confusing, not only because of the various types of insurances that are available, but because of the sheer number of products from different providers. To give you a better idea of areas that you should be covered against, here are the insurances that you should consider if you own a dental practice:

Practice Insurance If you don’t have a policy already, comprehensive practice insurance should be at the top of your priority list. Typically, a policy will cover: buildings or tenants improvements; the contents of the practice; public and employers’ liability; legal expenses; walk-in theft; computers; loss of revenue; and money. Be aware that buildings insurance and protection against terrorism and surgery loss are not included as standard, so if you’re looking to incorporate these risks into your policy, be sure to raise this with your adviser or provider.

Property Owners Insurance Saying that, buildings insurance is invariably included in property owners insurance (a type of cover designed specifically to provide protection for freeholders). As such, it’s important to go through your policies with a fine-tooth comb to make

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sure there are no duplications. Of course, buildings cover is just one aspect of property owners insurance. It also provides security against accidental damage, loss of rent, landlords’ contents, and the property owner’s liability, with the added benefit that properties held in trust are protected. So if you own a freehold that represents a substantial investment, you will need to take out adequate protection or you may get caught out.

Practice Overheads / Locum Cover The other insurance that you should always consider for your practice is practice overheads / locum cover. This offers financial protection in the event that a key member of the team falls ill or becomes injured and has to take time off work, covering both practice overheads and the cost of hiring a locum to fill their place. You might find that you are already covered in this area, as it is often the case that lending banks require this type of insurance to ensure that financial commitments¬ – including loan repayments – and UDA obligations can be adequately met. If not, it’s definitely worth exploring your options.

Medical Indemnity Insurance If it hasn’t been drilled into you already, take care to find comprehensive indemnity too – and be sure to regularly review your policy to make sure you’re getting the best coverage possible. After all, dentists working in the UK are now twice as likely to receive a claim for clinical negligence, and it is expected that a full time practitioner will receive two claims over the course of their career. There are two types of policies available: occurrence based and claims-made. Occurrence based provides cover against incidences that occur during the agreed policy period – regardless of when a claim is filed – while claims-made policies cover against claims made during the policy period. Once the policy period expires or if you move to a different insurer, the cover ends regardless of when the incident occurred. The other aspect to consider is whether to take out this kind of insurance on a contractual or discretionary basis. As such, it can help to consult a dental specialist adviser who will be able to guide you on the best route to take.

Income Protection While you’re there, don’t forget to ask about cover for yourself as an individual. Insuring your practice(s) might be a priority when you run a business, but you’ve also got a responsibility to protect yourself and your family – and income protection is an essential part of this. What it does is provides you with a monthly payment to the

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amount of approximately 65% of your gross salary should you need to take off work due to sickness, injury or an accident. There are no limits on how many times you can receive money during the policy period, so should you need to make multiple claims for different conditions, you are free to do so.

Critical Illness In the event of a more serious condition such as cancer, multiple sclerosis, heart attack, stroke, major organ transplant and so on, income protection would not suffice; that’s where critical illness cover comes in. This type of insurance pays out a single tax-free lump sum in the event of being diagnosed with a critical illness (as long as it’s specified within the policy), and is typically used to pay off debts, bills and mortgage, as a replacement for lost income. Naturally, no one wants to imagine that they would find themselves in such a scenario, but just in case, it’s always best to err on the side of caution and take out suitable critical illness cover.

Life Insurance Lastly, you will need to give thought to the level of life insurance you want to take out: how much cover you require; if you want the money to be released as a lump sum or in monthly payments; and if you want the cover for a specified term or indefinitely. Life insurance is essential for any professional, as it ensures that your estate is covered and any dependants are provided with financial support. As such, it is integral that you make the necessary arrangements with your financial adviser, and review regularly to make sure you’re getting optimal cover.

Take your time With so much to give thought to and so many different types of policies available, it’s always advisable to seek guidance from a team that has experience supporting dentists with all their insurance needs. Likewise, take your time when evaluating your options, as rushing your decision could compromise your cover. There’s a lot to take away from this, but with the right support and approach, you are sure to come away with the right insurance and peace of mind that you’re protected against all eventualities.

For more information please call 0845 345 5060 or 0754 DENTIST. Email info@4dentistsgroup.com or visit www.4dentistsgroup.com

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PROFESSIONAL DENTISTRY

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Chapter 5 BUYING/SELLING

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Price Bailey SCF Piece - Dental Journal / Luke Moore - Back to basics â&#x20AC;&#x201C; buying and selling a dental practice

Owning a dental practice is the ambition of many practicing dentists, with many practices being set up under a partnership structure amongst close colleagues. Whilst creating a practice is a long-term investment, at some point the business will need to change hands in order for the partners to realise their investment, perhaps at retirement. It is often the case that dentistry practices are incorporated with a number of shareholders that are responsible for maintaining the business and helping it to grow, the shareholders are usually the dentists practicing within the business. The shareholders of a dentistry practice benefit from a lower capital requirement when comparing against the requirement of setting up practice as an individual shareholder â&#x20AC;&#x201C; the contributed capital entitles each shareholder to a portion of the residual assets once all liabilities have been satisfied. Therefore a shareholder is able to enjoy a cut of the practices earnings and, potentially, a capital gain once they exit their position within the business.

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Whilst the shareholders of a practice can benefit from a lower initial cost of capital, the structure of the business if not properly considered can cause complications when one or more of the shareholders wishes to exit their position. Conflicts of interest may arise and depending on the content of the articles of association, the business will have a number of options. The Strategic Corporate Finance department within Price Bailey has extensive experience of dealing with such structures and situations, with the ability to establish the most appropriate route for all parties involved. Our advisers are able to create and then execute the most appropriate exit strategy for the business and its shareholders; walking the shareholders through the process and negotiating the best deal between the shareholders and/or external investors.

PROFESSIONAL DENTISTRY 2019 EVENTS PROFESSIONAL DENTISTRY MIDLANDS

6 APRIL 2019 @ KINGSGATE CONFERENCE CENTRE, PETERBOROUGH

PROFESSIONAL DENTISTRY SCOTLAND 11 & 12 OCTOBER 2019 @ GRAND CENTRAL, GLASGOW

Attracting over 5,500 professionals combined, these events will create significant development opportunities for the sector.

AVAILABLE COURSES... • IR(ME)R • Implant Theatre • Aesthetic Treatments Theatre • Business of Dentistry Theatre

PROFESSIONAL DENTISTRY NORTH

22 & 23 NOVEMBER 2019 @ MANCHESTER CENTRAL CONVENTION COMPLEX

• Core CPD Update • Digital Dentistry Theatre • Disinfection & Decontamination • Facial Aesthetics & Teeth Whitening • Laboratory Theatre

For 2020 dates please visit our website www.professionaldentistry.co.uk

• Periodontics Update • Practice Management Theatre • Teeth Whitening • Tooth Wear & Erosion

The PREMIUM events in the UK dentistry calendar.

• Bredent Implant Session + Plus many more TBC...

Call 01332 226590 // Book online professionaldentistry.co.uk This section is sponsored by

STRATEGIC CORPORATE FINANCE

SUCCESS LIES IN THE SMALL DETAILS Price Bailey has a specialist healthcare sector team that have worked with dental professionals for many years. We offer advice and support through every financial aspect of your professional dental journey. For further information please contact: Simon Blake, Partner T: 01223 507639 M: 07702 665342 E: simon.blake@pricebailey.co.uk

Stephen Reed, Partner T: 01603 708466 M: 07778 490973 E: stephen.reed@pricebailey.co.uk

pricebailey.co.uk Price Bailey Strategic Corporate Finance is a trading name of Price Bailey LLP. Price Bailey LLP is a limited liability partnership registered in England and Wales, number OC307551. The registered office is Causeway House, 1 Dane Street, Bishopâ&#x20AC;&#x2122;s Stortford, Herts, CM23 3BT, where a list of members is kept. Price Bailey LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. Some services are carried out by PB Corporate Finance Limited which is registered in England and Wales, number 04166306. The registered office is Causeway House, 1 Dane Street, Bishopâ&#x20AC;&#x2122;s Stortford, Herts, CM23 3BT. PB Corporate Finance Limited is authorised and regulated by the Financial Conduct Authority.

This publication is accredited by Erica Kilburn from EK Communications Ltd (EKC)

By Luke Moore

Back to basics – buying and selling a dental practice There’s a lot of advice out there when it comes to buying and selling a practice, a lot of which can often be confusing and hard to wrap your head around. This article aims to demystify the process, going back to basics so that when the time comes, you’ve got a clear idea of what to expect.

Buying a practice Getting started If you’re a first time buyer, you should know that there are a few steps you must take before you can even think about putting an offer on a practice. Building the perfect CV is one of them – in other words, earning the right qualifications, experience and stable work history so that you can prove to banks that you’re an ideal candidate for a loan. You will also need to get a handle on your personal expenditure and get your finances in order so that you have a sufficient deposit. That way, when you eventually find a suitable practice that fits your criteria, you can move ahead with affordability testing and begin the process, all being well. The next step is to put together a detailed financial proposal and business plan setting out your aims and objectives, market and competitor information, proposed arrangements, and financial forecasts; the latter of which should be backed up with evidence, where possible. This will then be reviewed by the bank, who will choose to either decline or proceed with your application. If successful, you would need to consult a dental adviser (if you hadn’t done so already), as it’s at this point that the process can get complicated.

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The legal considerations of the acquisition process Amongst the legal aspects that you should be aware of is due diligence. This is a process whereby the practice is appraised to establish its assets and liabilities and make sure it’s a viable purchase. While your legal representative would deal with this on your behalf, you would be required to review the information given to you and decide whether to proceed. There’s also the CQC application process to change over the registration, which should be started as soon as the Heads of Terms have been agreed along with your application for a Disclosure and Barring Service (DBS) check. Should you decide to purchase an NHS contract, be aware that the contract will need to be transferred from the vendor via the partnership route. On its own this can be a huge undertaking as there are a lot of challenges surrounding this part of the process. However, with the right help from a specialist dental broker you can rest assured that everything would be taken care of, so don’t panic if you’re hoping to go down this route! The last step, of course, is the contract exchange and completion; once that’s done you would be a proud owner of your own practice. So there you have it – a simplified version of what buying a practice entails. Naturally, there is more to it, but as long as you have the support of experienced professionals there’s no reason why you shouldn’t achieve your desired outcome when you come to buy.

Selling a practice - Planning your exit If you’re thinking of selling your practice the first thing you will need to do is devise what is known as an ‘exit strategy’. Experts advise that you should aim to do this around five years before you actually go to market, so formulating one is a top priority. As part of this you will need to make sure your accounts are in order, associate agreements are in place, and organise all the necessary documentation that will be needed later on down the line. During this time, it is integral that you continue to maintain a good patient list and avoid cutting back on your working hours, or you could end up reducing your profit margins and in turn, the value of the practice. Likewise, if there are ways in which you could grow your business and maximise your valuation be sure to take those steps long before you decide to sell – that includes having a practice healthcheck.

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Going to market When you’re ready to go to market, it’s advisable to seek the services of a specialist broker who will be able to help you collate the necessary paperwork, instruct you on the due diligence documentation you need to provide the buyer, carry out a valuation, and advertise your practice to potential buyers. They will also take care of all communication with interested parties – including the bidding process – as well as the Heads of Terms negotiations once a buyer is agreed. After this point, things can get a bit more complicated.

Sale process Generally, a transaction will pass the same key stages. These include: due diligence, sale purchase contract, CQC changeover, buyer’s finance, exchange and completion. However, there will be variations depending on your personal situation; for instance, whether you are NHS or private, a sole trader or limited company, and freehold or leasehold. As these are all intricate processes in their own right there are a number of pitfalls that can occur, but with the right support can be navigated through successfully.

The fundamental principles As a buyer or a seller of a dental practice there’s a lot to take in, but the key thing to remember is that you’re not expected to be an expert of the ins and out of the transaction. As long as you have a basic understanding of what the process entails and have the right support along the way you will come out the other side with the best results possible.

For more information on Dental Elite visit www.dentalelite.co.uk, email info@dentalelite.co.uk or call 01788 545 900

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Chapter 6

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PATIENT EQUIPMENT FINANCE Aspired Finance - What are your requirements when securing Finance? / Dental Equipment Finance - How to Expand or Renovate Your Practice

Dental Finance? Is it as straightforward as you think? What are your requirements when securing Finance? First and foremost, you require the very best options available to you but have you got time to source the best products within the market place? Many of the best options are not available directly to you so you need to use a specialist independent finance broker. Secondly you need to know the best way to structure an agreement to ensure your business secures the maximum tax reliefs available to your trading style. Thirdly you need to ensure funding is agreed in principal so you can plan your purchase, installation, refurbishment, without worrying about the final invoice. At Aspired Finance we have many yearsâ&#x20AC;&#x2122; experience of working with Dentists and specialised funders also talking with Dental Accountants to provide you with tailormade solutions for your business.

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Typically, when sourcing your equipment, you don’t look for the cheapest option available, you work with your suppliers and maybe purchase from recommendations from colleagues but with finance you always want the cheapest option!! At Aspired Finance we believe it is all about TRUST, if you can trust your broker to provide you the correct options at the best rates then you do not have to worry about your application. We have superb relationships with all the leading healthcare funders to provide you a service you can trust. Running your business is time consuming enough, we know exactly how to package a proposal to ensure we secure the best finance package in the quickest time. We provide an initial quote to plan your project so you know full costings at the beginning and complete the whole process dealing with your supplier and invoices and ensuring payments are made on time to enable a smooth process………

Aspired Finance – Trusted Funding for Professionals…. from Quote to Completion……..

PROFESSIONAL DENTISTRY 2019 EVENTS PROFESSIONAL DENTISTRY MIDLANDS

6 APRIL 2019 @ KINGSGATE CONFERENCE CENTRE, PETERBOROUGH

PROFESSIONAL DENTISTRY SCOTLAND 11 & 12 OCTOBER 2019 @ GRAND CENTRAL, GLASGOW

Attracting over 5,500 professionals combined, these events will create significant development opportunities for the sector.

AVAILABLE COURSES... • IR(ME)R • Implant Theatre • Aesthetic Treatments Theatre • Business of Dentistry Theatre

PROFESSIONAL DENTISTRY NORTH

22 & 23 NOVEMBER 2019 @ MANCHESTER CENTRAL CONVENTION COMPLEX

• Core CPD Update • Digital Dentistry Theatre • Disinfection & Decontamination • Facial Aesthetics & Teeth Whitening • Laboratory Theatre

For 2020 dates please visit our website www.professionaldentistry.co.uk

• Periodontics Update • Practice Management Theatre • Teeth Whitening • Tooth Wear & Erosion

The PREMIUM events in the UK dentistry calendar.

• Bredent Implant Session + Plus many more TBC...

Call 01332 226590 // Book online professionaldentistry.co.uk

Low Rate Finance Low rate Funding Dental Equipment Equipment

Digital Equipment • PracticeDigital Refurbishing • Practice Purchase Refurbishment • Let Buy to Mortgages Residential Mortgage • Tax Loans www.aspiredfinance.com • Cars

This publication is accredited by Erica Kilburn from EK Communications Ltd (EKC)

Dental Equipment Finance - How to Expand or Renovate Your Practice For dental professionals, being in a position to take advantage of limited-time pricing on dental equipment and make quick purchasing decisions is imperative to offering the best service to patients and remaining competitive. However, while investing in the latest technology and machinery is important, these assets are often expensive and the process of acquiring them can be overwhelming. Not only do you need to select the right equipment and choose a vendor. You also need to find a way to finance this investment. Fortunately, there are a number of financing options open to you when you need to renovate and expand your practice.

Choosing a Finance Option For Your Practice Whether you are just starting a new practice or you are looking to invest in new state-of-the-art equipment, choosing the right financing solution will ensure you get the money you need, pay a fair rate of interest and enhance and protect your creditworthiness for future financing. Here are some of the options available to dental practices:

Unsecured Small Business Loans Typically suited to new or smaller practices, a small business loan from a specialist dental practice lender usually offers much lower percentage rates for smaller amounts of funding than a bank loan and can be applied for online. Many lenders will approve your small business loan within 24 hours and you could have your money within a matter of days.

Secured Business Loans If you have your sights set on borrowing a higher sum of money, a secured loan will usually be your best option. The good news is that a secured loan can often reduce the cost of borrowing and allow you to spread your repayments over a longer period. Because secured loans are less of a risk for lenders because they are secured against your property, they typically come with lower interest rates than other types of lending. However, they come with more risk for the borrower as their property could be possessed if repayments are not maintained.

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Hire Purchase Agreements Arranging a hire purchase (HP) agreement can make a lot of sense for a dental practice, especially on durable equipment designed to provide years of reliable service. Hire purchase allows you to spread the cost over a number of years and is the ideal solution for long-term needs. You will normally be required to pay a deposit in addition to fixed monthly repayments. At the end of the repayment term, you will own the equipment outright.

Leasing Leasing allows you to acquire the latest dental equipment and technology that your practice needs now without being burdened with the cost of ownership. One of the biggest benefits of choosing to lease is that it gives you flexibility. This gives you the freedom to regularly update equipment so that you can offer your patients cuttingedge technology, such as laser teeth whitening and other cosmetic dentistry. Many leasing arrangements also offer you the option of giving back the asset at the end of the term or owning it outright. Some leasing providers also offer insurance and maintenance as part of the lease agreement.

Invoice Factoring Another funding option that is gaining popularity is invoice factoring. Any unpaid invoices your business has on its books are considered as assets and can, therefore, be used as collateral on a loan. A dental practice that offers a patient payment plan will usually have plenty of invoices to use as collateral.

Buying New or Used Dental Equipment If you are opening a new practice, good quality used dental equipment could be a sound investment, at least in the early years. Dental equipment is designed to last and there are many items of used and refurbished dental equipment on the market that will allow you to save money without compromising on offering quality service and treatments to your patients.

Advice For Securing a Dental Equipment Loan However you choose to secure your funding or leasing, you will need to prove that your practice is financially viable. Here are some tips for securing the funding you need:

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Proving Your Creditworthiness Before you can secure a loan, the lender will need to be satisfied that you can meet the monthly repayments. In addition to looking at proven income streams and the number of patients you have on your books, lenders will also look into your personal financial situation to ensure it is stable. This may involve looking into your investments and savings and any outstanding credit you have under your name, such as loans and mortgages. The more you can do to prove you are creditworthy the more chance you have of being accepted for a business loan and securing more money as your practice continues to grow.

Create a Business Plan A robust business plan is a great way to show lenders how your practice is doing and your forecasts and projections for future growth. A good business plan will also get you thinking about your cash flow, how much you earn at various points in the year and the patient numbers you need to retain and attract in order to thrive.

Look For a Specialist Lender Despite the economy picking up in recent years, there are still some banks that are reluntant to offer loans to small businesses. For this reason, it may be best to seek out a lender that specialises in dental loans and understands the pressure faced by new and growing practices. Specialist lenders will have the expertise and knowledge to tailor their products and services to suit your needs and will usually offer a range of secured and unsecured loans as well as leasing plans.

Final Thoughts Securing those high-cost items, such as drills, chairs and dental instruments is only the beginning of building your practice. Investing in the latest technology and equipment, such as digital x-rays, dental lasers, photography and digital impression systems will help you to offer a huge range of treatments and services to your patients and the highest standard of care. Choosing the right finance will ensure you can grow your practice and stay competitive without eating into precious capital.

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Chapter 7

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VALUATIONS Max Bazzucchini - Valuations of dental practices; a combination of science and art Jonathan Jacobs, AN LAW - The Relevance of Practice Valuations in the Legal Process

Valuations of dental practices; a combination of science and art Most written appraisal reports come with a disclaimer that there is no universal standard methodology for valuing dental practices. There are also an array of false beliefs and strong opinions. The aim of any valuation is to provide a value that is as objective as possible in an environment of uncertainty. To reach the total value, you need to consider the future value of the business. Given that the future, by definition, is uncertain - the whole process can never be an exact science. Yet as brokers it is our job to get the best possible market value for both interested parties. I read yesterday, in the quarterly goodwill survey from NASDAL, that valuations had dropped 12% (128% of fee income) and the value for deals completed has risen marginally, with an average goodwill value of 136% of gross fees. So why have values dropped? Is it a result of the methodology used or severe staffing shortages or the current political instability or the economy?

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But let’s go back to the valuation topic. You will hear dentists make statements along the lines of – “my practice is worth one and a half times my net income” or another frequent one “the total should be based on a % of my last three year’s collections.” The problem is that neither of these cover the full spectrum and will result in an unfair market value. The value of any business is based on its cash flow, the risk of the investment and the return on investment for the buyer. At Pluto Partners we use income-based valuation methods, either discounted cash flows or capitalised earnings to accurately establish a fair value, taking into account both the tangible and intangible assets of a practice before applying a rate of return to the earnings stream. Net asset valuation methods can be used as a reference point. A seller can give a list of a hundred reasons why they believe that their practice is worth one value but this is matched with a hundred and one reasons from the buyer to why the total is too steep. We must remember that this is a very significant financial decision for the dental practice owners and offer patience and understanding. Nobody wants to overpay, but the real value in dentistry is the ownership of the profit stream over the years. As a seller, how do you put a value on the years of memories you’ve made between these walls; the friends you’ve made; and the people you have helped? And how does a city buyer longing for a quieter life value a practice in the little picturesque town with the river running through it and great schools for his/her kids just down the road? Our initial valuation report starts with a conversation and a meeting, usually out of surgery hours, with the dental practice principal(s). Below is a list of documents and information required for our initial dental practice market appraisal; - Last three years trading accounts - Most recent NHS Pay if applicable - NHS Activity Statement (3 years) - Check the NHS Contract for any change of control clause - LAT details - Advice on CQC application process based on LTd co or partnership

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- Private turnover and type of dentistry - 12 months income from Management account - Clinicians details – including their role, working days, pay rate, starting date and income generated - Hygienists rate and income - Support team – specifying their position, days or hours worked, pay rate and start date, bonus pay - Details of the freehold or lease terms - Latest CQC inspection report and actions - Space for additional surgeries - Age of equipment and chairs - Percentage of Chairs occupancy/utilization - Reasons for valuing and selling the dental practice At Pluto Partners we have three men who know a lot about valuations - our Director’s Dr Pieter Claassen, Max Bazzucchini and Nick Rolph. Max has been involved in excess of 1,700 dental practice valuations and the sale of over 200! Pieter has experienced the valuation process many times, owning a regional group. Nick acquired more than 130 dental practices for ADP Dental. They help to shape Pluto’s process in tackling the world of valuations with a fair balance. Please check out our website for further information – www.plutopartners.co.uk All information are treated with the strictest confidence at all times

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The Relevance of Practice Valuations in the Legal Process As Max Bazzucchini alludes to in his article, the importance of obtaining an accurate valuation of your practice, should you be looking to sell or even acquire additional funding for expansion purposes, is critical, not only for the needs of the Bank that is providing the funding, whether to you or a potential Buyer, but also for a Buyer’s accountant (who may or may not be a dental specialist) and your Solicitor. Some dental practices use valuations as a tool to see how their business is progressing without any intention of selling and may present this to their Bank in order to satisfy their Relationship Manager that they are on the right track. Others may require a valuation in order to gain an insight into the practice’s worth in terms of goodwill, equipment, fixtures and fittings and the premises, to get the business ready for sale. The valuation report along with the practice accounts and where available, particulars of sale are probably the three pieces of information that a Solicitor will see at the very outset of a transaction and it is based upon this information, which will be different for every practice, be it wholly NHS, wholly private or mixed that will attract potential buyers. Once a Buyer has expressed interest, rather than wait until “hands have been shaken” with the practice owner, they should be thinking about which experts that they will ned to guide them through the process of becoming a practice owner for the first time or expanding their business empire. The valuation will help them approach their accountant, who should be dentally aware, as to whether the practice is a viable proposition and with that information at hand, they can approach the Bank (again dentally aware) to talk about funding the acquisition. Solicitors are a “distress purchase” – that is to say we are only approached when we are needed, unlike accountants who will have a repeating relationship with dentists as yearly accounts are required. It is perhaps, better to speak with a lawyer in the early days rather than waiting until a deal is agreed upon. By doing so, you gain the comfort of having a dental expert lawyer on board who should be able to assist you with every aspect of the oncoming transaction and will undoubtedly be able to find answers to questions concerning all the other aspects (financial, valuation, NHS issues, CQC issues etc).

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The sale and/or acquisition of a dental practice is a “team effort”. The accountant, valuer, bank, financial adviser and solicitor need to work with one another for your benefit. Surprisingly, dentistry is a very tight-knit profession and the likelihood will be that each of your chosen experts will know someone in one of the other disciplines previously mentioned. AN Law are a specialist dental firm. Jonathan Jacobs deals with all aspects of dental transactions including sales and purchases, partnership agreements, goodwill transfers, Care Quality Commission applications and Area Team matters. The transactions that the firm handles include both asset and share based deals and the practcie prides itself on meeting each and every one of it’s dental clients at the outset. For more details, contact Jonathan on 01925 634681 or 07776 132339 or check out the website www.anlaw.co.uk

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How Much Is Your Dental Practice Worth? No two dental practices are exactly the same and so it makes sense that no two dental practices will be worth exactly the same in value. Whether you are looking to invest in a new practice or sell your existing practice, the end goal is the same getting the best deal possible. The dental practice valuation process is often one that is shrouded in mystery, but it doesn’t have to be. In this article, we’ll take a closer look at how the valuation process works so that you can get an idea of what your dental practice is worth.

Art or Science? If we break down a practice valuation, a number of factors come into play. We’ll take a look at each of these separately, but when it comes to the question of whether the valuation process is based on art or science, well, it’s a bit of both. To get the bigger picture of worth, we need to look at key elements of the practice such as demographics, location, number of patients, number of associates, equipment and of course, profit. All of these factors must be taken into account when buying or selling. Your practice might be set in a pleasant leafy suburb, but if your patient numbers have reduced recently or your associates are leaving the practice, location doesn’t mean much in the grand scheme of things. A savvy buyer will want a holistic view of the business.

Goodwill and Multiples - What Do They Mean? When calculating the value of your practice, a valuation expert will consider what is commonly known as goodwill and multiples. Goodwill relates to the non-tangible elements of your dental practice, such as the number of patients you have on your books and your reputation in the local community. In other words, everything except your equipment and fixtures and fittings. These elements are valued separately. To determine your goodwill value, valuers break down your net profit figure and extract elements such as any depreciation on your long-term assets and how much interest you pay on business loans. These elements will not necessarily be relevant for the next business owner and are specific to you.

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This adjusted net profit figure, known as EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) is then used to provide a valuation of your practice.

What is EBITDA? EBITDA is used to measure the financial performance of a company and can be used as an alternative to net income or earnings when being used for valuation purposes. It can be a little misleading as it disregards the cost of capital investments such as equipment and property and any expenses associated with debt. If you have a good accountant, they should calculate your EBITDA regularly and give you advice and support on how to improve it over time. When you do come to sell your practice, this will enhance its value. In recent years, dental practices have been sold for between three and seven times their EBITDA. However, this depends on a number of different factors and typically a practice that has a lower perceived risk and higher sustainable or perceived profits, will have a higher multiple.

Selling a Dental Practice - What You Need to Know If you are about to take the plunge and sell your practice, there are a number of things you can do that will ensure the process is a success.

Instruct a Dental Specialist Solicitor Dental specialist solicitors know the ins and outs of dental purchases and sales and will ensure that everything runs as smoothly as possible. To avoid costly mistakes and delays, make sure you instruct a solicitor early in the process.

Arrange a Valuation Taking the time to get a professional valuation will not only get you an accurate market price, but will also protect your tax position. Even if you plan to sell to an associate, an experienced dental broker will help you to get the best price for your practice.

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Take Care of Due Diligence As the seller, you will need to provide prospective buyers with all the information they need about the practice. Your legal teams will help you to collate this information, and it is best to do this as early as possible in the sales process so that any legalities or issues can be ironed out at the start. You will need to provide details such as maintenance agreements, NHS pay and activity statements, associate agreements, employee contracts and equipment inspection certificates.

Property Paperwork It is likely that any prospective buyer will need to obtain finance for the purchase of the business. This means that the bank will likely want to secure the loan over the property. To ensure this process goes as smoothly as possible and to avoid any delays you should ensure that all necessary documents are made available. That includes title deeds, relevant planning permission, buildings insurance and any other paperwork pertaining to the property.

Final Thoughts You have worked hard to build a thriving business, so it makes sense to get the best price for it. While dental practice valuations might involve art and science in equal measure, understanding how the process works will help to eliminate much of the mystery surrounding the numbers. Whether you are interested in selling your practice now or a little further down the line, working with a professional valuation team will help you to reach a transparent and accurate valuation.

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