We hope you are doing OK during the pandemic and that the new ways of working and living have not been too much of a burden for you. Our message today is simple. You should ‘Hold onto that Ambition’.
We expect it may be some months before we see a return to the ‘new normal’. It is a bit of a moving target. Which makes it important to stay up your finger on the pulse.
UK Plc has survived some deep and damaging recessions in the past 50 years as well as a Banking Crisis.
If you have been looking to purchase a dental practice, then hold onto that ambition. Whether the expansion of your existing business through acquisition was your objective. Or you were planning to make that first step into business ownership. Then the business landscape may look a little different but your general direction of travel should still be the same.
Most of the mainstream Banks are aware that new business proposals are as vital to them as new patients are to the dentist. The most active lenders in this market have stressed to us that they are ‘open for business’.
Banks Credit Appetite
It is too early to say what impact the economic crisis will have on Banks’ credit appetite generally. But primary healthcare has always been a valuable segment in the asset books of mainstream lenders. We might expect a more searching analysis of new proposals and perhaps a slightly more conservative view on loan to cost. As well as possibly an increase in lending margins across the board, but we do not foresee these changes having a material impact on the availability of practice purchase finance.
We expect that lenders will favour borrowers who are able to present a detailed and balanced business plan. This should include a well-argued funding request supported by detailed financial projections.
Navigating the debt markets has often proved a time-consuming and sometimes frustrating process without the support of a suitably experienced adviser. You will need those strong relationships with all the mainstream lenders. We therefore recommend that prospective dental practice buyers should engage a corporate finance professional like Martin How. We expect to see such experts being an essential member of the buyer’s advisory team whether you are an experienced operator or a first time buyer.
If you had a goal to purchase a dental practice, how detailed were your search criteria? How many dental practices did you research on paper and how many viewings did you undertake? What conclusions did you draw from that research? What professional support did you enlist in reviewing those choices and interpreting the numbers?
Financial statements are important. But Banks spend a lot of time looking at non-financial considerations. Such as competition, demographics, footfall and a host of other measures. Often it is this non-financial research which uncovers the potential in a business or alerts the buyer to issues which need to be clarified with the dental broker marketing the practice.
I hope you can now see why we are recommending to our clients that they hold onto that ambition.
Starting a dialogue now with an experienced commercial finance specialist will help to define your search criteria. Check your personal financial profile, and identify areas for enquiry. As well as further diligence on any ‘possible targets’ that come across your desk.
Keep safe and start talking to Lily Head Finance.
Please Contact Us if you would like to talk more about obtaining the #dental practice funding you deserve.
Dated: 6th May 2020.