Has anyone bought a business?

[judybloomno5]

My DH is a dentist and we are looking at buying a dental practice.

DH is a relatively successful dentist already with his own Ltd company the turnover for which has grown year on year and is currently doing a masters in Orthodontics which will improve his earnings further. His patents love him and he is a great earner for his boss. However we don't have much in the way of capital due to moving house recently and me being out of work.

I am starting to look at finance options for buying our own place (I am desperate to change careers) with a view to buying now rather than in 5 years time which was our plan. I'm reluctant to put our house as security. Does anyone have any experience in business finance and know how it works?

I would contact potential lenders but we are looking very speculatively at the moment and I am not keen to be harassed by them.

[Tatey25]

I have bought and own a few businesses. I would imagine most lenders will be looking for some form of securitised lending, whether it be your home (which I would avoid at all costs) or the target business assets being acquired.

I think it is worth having a solid understanding the financial performance of the practice, then engaging with a few specialist lenders to obtain typical terms for a cashflow lend. Alternatively, engage a specialist broker in acquisition finance to obtain finance terms for you.
Good luck.

[judybloomno5]

Thank you- DH and I have decided that we are not securing the practice against our home. Its for our children's home so no way.

It might be that we have to save within our Limited company and withdraw less dividends. I am going to overhaul everything in the new year anyway and get everything sorted out.

Do you think a specialist broker would meet with us and helping us plan? DH as an associate dentist turnover close to £400k ON HIS OWN. 40% of that is automatically the owner of the practice and then he pays large chunks of his share on lab fees and paying a hygienist etc.

[Tatey25]

I definitely agree with you on not offering your house as a PG. I don't think there are any shortages of lenders out there, so I think it would be a good idea to engage with a decent broker and let them do the work for you. They work on a success fee so should work hard to get a deal over the line for you. Their appetite, and interest rate, will depend on the risk of the practice generating sustainable cash flows, or put another way sustainable profits that can re-pay the loan. Generally if the practice engages with NHS work, that should give the lenders a warm feeling. If the practice has a mixture of private and NHS it could be regarded as more sustainable because the income flow is from multiple streams. Typically Banks will be looking for a profit after all drawings etc, of 175% any loan repayment.check out www.nasdal.org.ukk_, they seem to have plenty of information about goodwill valuations etc. Additional resources:

1. www.money4dentists.com/practice-financing.html
   
2. www.braemarfinance.co.uk/dental?gclid=CMq4y6z2nNECFUIq0wodyNAA9g#undefined12
   
3. www.healthcarefunding.co.uk/dentist_finance.php
   
4. www.essentialmoney.co.uk/practicefinance/
   Good luck.

[judybloomno5]

Thats wonderful- thank you very much on spending time to help me out.

DH is a cash cow for the current business he is working for, does lots of publicity work for them (he does a lot of charity work) and all the support staff would jump through hoops for him. We've found a practice locally which is £130k net profit profit without DH even being there (the existing dentists aren't exactly working flat out and aren't business minded at all).

[Tatey25]

Good luck.