Slow in, fast out: What Stirling Moss can teach us about selling a dental practice

Planning to sell your Dental practice? Thomas Coates explores a growing shift in the dental market, with more practice owners planning their exit years in advance, and explains why early preparation can strengthen buyer confidence, value and sale outcomes.

One of my favourite motorsport quotes is attributed to Sir Stirling Moss:

"It is better to go into a corner slow and come out fast, than to go in fast and come out dead."

Whilst he was undoubtedly talking about racing cars rather than dental practices, it is a principle that applies remarkably well to selling a business.

One of the most noticeable shifts I have seen in the dental market over recent years is not necessarily the number of practice sales taking place, but when the conversations start.

Increasingly, I find myself speaking to practice owners years before they have any intention of selling. Not months. Years. The approach we have taken as a firm is that we have always been happy to have those conversations, years before they ever turn into chargeable work.

That might seem odd at first. If retirement is still some way off and a sale is not on the immediate horizon, why start thinking about it now?

The answer is simple. The strongest transactions are rarely built in the six months before a practice goes to market. More often, they are the product of years of sensible planning, preparation and decision making. My own personal view is that you should begin thinking about your exit on your very first day of business ownership and continually revisit your exit plans.

In other words, the most successful sellers tend to go into the corner slowly.

Sale preparation starts earlier than ever

Historically, many practice owners only started thinking seriously about a sale when retirement was approaching or a buyer had appeared unexpectedly. That is changing.

Increasingly, owners recognise that preparation creates options. They understand that the earlier potential issues are identified, the easier they are to address and, in turn, the greater control they have over timing, value and outcome when the day eventually comes to sell.

From my perspective, that is a very sensible approach. The owners who tend to achieve the smoothest transactions are rarely the ones rushing to get their affairs in order six months before going to market. More often, they are the ones who have spent years gradually improving their business, tidying up loose ends and ensuring that when an opportunity presents itself, they are ready to act.

Buyers are looking beyond the numbers

For many years, practice valuations and sale discussions centred largely around financial performance. Turnover, profitability and EBITDA were the key talking points.

Those metrics remain hugely important, of course. However, buyers are becoming increasingly sophisticated and due diligence is becoming increasingly detailed. The question is no longer simply whether a practice is profitable.

Increasingly, buyers want to know how well the business is actually run. Lenders are asking more questions. Buyers of all sizes are carrying out deeper investigations. Even independent buyers are becoming more commercially aware and better advised.

As a result, buyer confidence is increasingly driven not just by financial performance, but by the overall quality and structure of the business itself. A well-run practice with strong systems, good documentation and a stable team will almost always attract greater confidence than a business with similar financial performance but a collection of unresolved issues sitting beneath the surface.

The issues that matter most

When buyers begin looking under the bonnet, certain themes tend to emerge time and again.

Areas that regularly attract scrutiny include:

• Tax planning

• Associate agreements. Are they in place? Are they bespoke to your practice or simply a generic template with the names changed? Do they contain meaningful restrictions on associates and their future activities?

• Staff retention. Associates are increasingly becoming the kingmakers in practice sales, particularly when larger corporates are involved. Are they on board and willing to stay?

• Employment contracts.

• HR processes.

• NHS contract performance, including historic clawback and breach notices.

• Property arrangements.

• Corporate structure.

None of these topics are particularly glamorous. Most practice owners would probably rather spend an afternoon doing almost anything else. The difficulty is that these are precisely the areas that can influence buyer confidence and determine how smoothly a transaction progresses.

The problems that cause delays are rarely new

One of the biggest misconceptions about practice sales is that transaction problems somehow appear during due diligence. In reality, they rarely do.

The issues that cause delays are usually matters that have existed within the business for months or even years. The associate agreement was unsigned before the sale process started. The lease had a short remaining term long before the buyer became involved. The director loan account issue existed well before Heads of Terms were signed. The Company has £1 million in cash that they need the Buyer to “acquire”…

The sale process itself does not create these problems. It simply shines a spotlight on them.

That is why so many of the difficulties we encounter during transactions are entirely foreseeable. They are not surprises. They are often just long-standing loose ends that have finally attracted attention.

Preparation creates options

Perhaps the greatest benefit of early preparation is not simply reducing risk. It is creating flexibility.

Owners who prepare well in advance are often in a much stronger position when opportunities arise. They can respond to buyer interest with confidence, negotiate from a position of strength and avoid the unpleasant surprises that sometimes emerge halfway through due diligence.

Preparation is not simply about fixing problems. It is also about creating value. Increasingly, buyers are attracted to businesses with strong systems, stable teams, reliable compliance processes, established HR support and management structures that do not depend entirely upon the principal. The earlier those improvements are made, the more time they have to influence buyer confidence, competitive tension and ultimately valuation.

The same principle applies to legal, property and tax planning. The earlier these conversations take place, the greater the number of options available. By contrast, decisions made under the pressure of an active transaction are often more limited and considerably more expensive.

Issues that might be difficult to resolve in the middle of a transaction often become relatively straightforward when addressed two or three years beforehand. Small improvements made consistently over time can have a significant impact on the overall attractiveness of a business.

Final thoughts

Which brings me back to Stirling Moss.

The temptation when contemplating a future sale is often to leave everything until the point where a transaction feels imminent. To charge into the corner at full speed and hope everything works itself out.

The practice owners who achieve the smoothest transactions, encounter the fewest surprises and ultimately place themselves in the strongest position are usually those who started preparing long before anyone realised they were approaching the bend.

When it comes to selling a dental practice, the sellers who emerge from the corner fastest are usually the ones who started preparing for it long before they reached it.