Start with what the seller is actually selling

Goodwill, equipment, property (or a lease), and the patient list are rarely neat boxes. You need a clear picture of what is included, what is leased, and what obligations pass to you on completion.

Request a complete asset list with current values, remaining finance terms, and any items excluded from the sale. Equipment that looks included might be on hire purchase with significant remaining balances, or leased from a third party with transfer restrictions.

Financial records to request

Before analysing numbers, ensure you have the right documentation. At minimum, request:

  • Three years of accounts — filed accounts and management accounts to spot trends.
  • Monthly management accounts for the current year — filed accounts can be 18 months old.
  • Bank statements — 12 months minimum to verify reported figures.
  • NHS contract documentation — current contract, UDA targets, performance reports, and any correspondence about contract changes.
  • Associate and staff agreements — terms, notice periods, and any unusual arrangements.
  • Supplier and finance agreements — lab contracts, equipment finance, and lease terms.
  • Tax returns and computations — to verify what was declared matches what was reported.

Numbers to stress-test

  • NHS contract position, UDA performance, and any clawback exposure.
  • Private income by treatment type and how much depends on specific clinicians.
  • Associate and hygienist agreements — notice periods, splits, and what happens if someone leaves.
  • Lab and materials as a percentage of turnover; equipment finance and hire purchase.
  • Working capital: who owes what, and whether reported profit still leaves enough cash in the business.

Revenue quality and sustainability

Not all revenue is equal. A practice generating £700,000 with stable, diversified income across multiple clinicians is worth more than one generating £900,000 that depends heavily on a single associate's private work.

NHS income analysis

Check UDA delivery rates over three years. Consistent achievement of 95%+ targets suggests reliable NHS income. Erratic delivery or persistent underperformance may signal workforce issues or a contract at risk of reduction.

Investigate any clawback history — if the practice has returned NHS funding in recent years, understand why and whether the underlying problem is resolved.

Private income analysis

Break private revenue down by treatment type and clinician. High-value treatments concentrated with one dentist present a key-person risk. Also assess patient demographics — an ageing patient base in a declining area may not sustain current private revenue levels.

Cost structure deep dive

Analyse costs against industry benchmarks for a practice of similar size and mix.

  • Staff costs: typically 50-60% of turnover including associates. Significantly higher suggests overstaffing or above-market pay rates.
  • Lab costs: 8-12% of private revenue is typical. Higher percentages may indicate expensive lab relationships or high-value restorative work.
  • Premises costs: rent, rates, and utilities relative to local market rates. Check lease terms — upcoming rent reviews or break clauses affect future costs.
  • Equipment and finance: total HP and lease commitments as a percentage of turnover. More than 8-10% may indicate recent heavy investment or over-leveraged purchasing.

Hidden liabilities and risks

Some of the most costly surprises emerge after completion. Look specifically for:

  • Deferred maintenance — equipment approaching end of life, premises needing refurbishment, or IT systems requiring replacement.
  • Outstanding claims or complaints — check GDC records and practice insurance history.
  • HMRC enquiries — past or ongoing, which could result in additional tax liabilities.
  • Staff issues — pending tribunal claims, unresolved grievances, or TUPE obligations you inherit.
  • Environmental or regulatory compliance — CQC requirements, infection control standards, or building compliance that needs addressing.

Tax and structure

How the transaction is structured (asset vs share purchase) changes tax and risk. Get advice early so you are not negotiating blind.

An asset purchase generally favours buyers — you choose which assets to acquire, claim capital allowances on goodwill and equipment, and avoid inheriting unknown liabilities. A share purchase transfers the whole company including its history, which may include tax liabilities or contractual obligations the current accounts don't reveal.

Consider the Stamp Duty Land Tax implications if the sale includes property, and whether the goodwill qualifies for entrepreneurs' relief on the seller's side — this can affect negotiation dynamics.

If you want this tailored to a practice you are seriously considering, get in touch — we review acquisitions for dental buyers regularly.