Practice one: London and surrounding counties
Description and location
Conveniently located just off the central traffic island in the town centre, with a retail park and bus station directly opposite, this four-surgery NHS practice benefits from a highly visible trading location.
The business premises have been converted from residential use and, after significant extension and remodelling, now houses a modern, well-equipped and spacious practice.
With recently extended opening hours and occasional Saturday morning clinics, chair time is being maximised and the principal has recently introduced the services of a part-time hygienist together with a specialist orthodontist on a monthly sessional basis to focus on increasing the historically low private income streams.
With £835k of the current £894k annual income being derived from NHS income, cash flow is stable and the large NHS patient base of 10,000 provides a good opportunity to further grow private income from offering enhanced treatment options and popular cosmetic procedures.
The latest accounts include a cost for associate fees of £241,550 for the year, however this is significantly reduced by over £95k per annum with the incoming buyers’ business model, thereby increasing net profit significantly.
Laboratory and material costs are well controlled at 9.6% of turnover due to close review of purchases and effective stock control. Contracted staff costs are confirmed at £114,198 inclusive of Employers’ National Insurance contributions.
With the vendor’s objectives for selling being to reduce increasing management responsibilities and to expand his studies into specialist fields, he is willing to retain a presence at the practice if desired on a part-time basis, or alternatively to leave directly upon sale. As he currently generates minimal private gross personally, it is considered that his leaving would not pose a significant risk to the protection of the goodwill for the new owners.
The further option to lease or purchase the freehold was universally welcomed by potential buyers, and enabled specialist independent financial advisers, Medifinancial, to act on their behalf to approach numerous healthcare lenders and obtain the best possible structure of package for each of its clients’ individual financial circumstances, and access rates not available on the high street.
With such an active market for highly desirable NHS acquisitions in this area, an ‘Open Day’ viewing methodology generated a competitive environment for us to escalate multiple negotiations quickly and efficiently. Numerous offers were secured within only three days of viewings, with best and final offers being submitted on a ‘sealed bids’ basis enabling the vendor to assess the most suitable overall deal for his requirements, both in terms of sale proceeds and work requirements post-sale.
The successful purchasers were an independent husband and wife team whose business model maximised the profitability performance of the business, enabling them to comfortably afford repayments on their investment, whilst managing to implement a ‘work life balance’ that suited the needs of their family.
£2,019,000 inclusive of goodwill, equipment, fixtures and fittings and freehold.
Visit http://mediestates.co.uk/practice-price-index.aspx to read more from Practice sales intelligence, including more practice analysis and engaging articles written by Heather Meakin – director at Mediestates.