The Process
Breaking it Down Step by Step
As with any expansion of a business everyone is full of helpful hints as to what you shall experience and how long it shall take. From the old adage of ‘a corporate can do it faster’ to ‘the whole thing shall take 2 years’, it’s hard to measure where your asset transfer process and transaction line up with other peoples and if it is progressing as it should. Something we hear quite regularly is that the ‘average’ completion of an asset transfer will take six months, but how do you know if you are average or not?
While every process and transaction does differ there are some key milestones and actions that you can look out for to make sure you are heading in the right direction. Below I have outlined a brief procedure and transaction for you.
Your Elite GP consultant will work with you and your solicitor to guide the sale and ensure that as far a possible all aspects of the transaction run side by side.
We will work with you to understand your instruction to source practices to add to your existing portfolio, this will include the following as a minimum:
- Location
- Patient List size
- NHS Contract by Type
- Additional Services offered DES/LES
- QOF indicators/performance
- Patient Demographic
- Patient Satisfaction
- Funding Requirements
Our intelligent research allows us to be able to source practices that will meet your needs and we will work to realistic timescales and are confident of being able to find the right practice(s) to meet your expansion plans. If you already have an idea of who would like us to approach that’s fine too and we will approach assuring confidence is maintained at all times. Equally, as important are the practices that you do not want us to approach as we would not want to put forward any proposal where there are professional and personal interests would not be viable to you! We would register you as a buyer assuring that all potential acquisitions are and will remain confidential at all times. We will never reveal your details to a prospective seller without your expressed permission and we would also expect that any details that we pass on to you remain confidential between all parties.
Speaking of which, once you are on the register and practices sourced your consultant will ask as to your availability to view the practice(s) offered for consideration. All the time your consultant will be taking the stress of running around after potential practices, checking finance and handling negotiations off your hands but keeping you in the loop at all times. Once viewings have taken place and you have indicated which practice(s) you are interested in we can advise you on a proposal to move the process forward so in the meantime it’s a good idea to start on your due diligence paperwork and find a General Practice Experienced Solicitor you like so once a transfer is agreed, you can hand over the required paperwork and be off to a quick start!
We also offer you the opportunity to advertise your exacting business requirements completely free of charge. We offer this service to our elite buyers and your details, as always will remain confidential. You can place as much or as little information as you require and be safe in the knowledge that we receive many visits from partners interested in selling. This opportunity remains focused for 12 months. Should you source the right business then there is no introduction fees. We feel that this service enables you to have the business edge over other potential purchasers.
The time it takes to get to the agreeing a transfer does vary from practice to practice, and will often depend on the type of practice you are seeking, and you should be guided by your consultant here as what the likely timescale would be. In reality, very popular practices are often agreed in four weeks after allowing time for viewings and a tender process. With slower burning more complicated practices such as specialist practices this may take up to three months as an individual/corporate buyer you will undoubtedly closely review income streams and ensure finances stack up before tabling an offer which would not only include the financial element but also any terms for retention of staff, NHS Contracts or handover for the Principal Partner(s) as examples. No two practices, no two vendors and no two buyers are the same, so there is no one size fits all!
Once you have reached the stage where the terms have been agreed and commitment to proceed taken, then it is easier to track your sale as to ‘where it should be’. Again, there are some detours from the path depending on if you are a Sole Trader, partnership or a Limited Company, a freehold or a leasehold, but in the whole most transactions will pass these key stages.
Due Diligence – As above, this is an area where preparation is key and is the biggest area where a vendor can come unstuck in the process, as the daydreaming of retirement and sailing around the Bahamas make it hard to focus on staff contracts and equipment warranties!
As far as possible the full list of DD should be with your solicitor within two months of the agreed transfer, but in reality while your own solicitors will have their own questions, the paperwork remains largely the same and can be collated together a lot earlier. If you are worried that you may not be able to get everything together we are happy to offer a DD assistance service to help you get to the bottom of the paperwork pile.
Your solicitor will work with the other side to agree an asset contract which best protects the interests of all parties. This is worked alongside the due diligence enquiries with the final agreements being made just prior to exchange. Many Vendors find it is this stage where if they have chosen a high street solicitor they can come unstuck as most General Medical Practice Solicitors know each other and have general templates agreed meaning the precise details of your transaction are the only outstanding points, speeding the process considerably. We would always advise that a Solicitor with general practice experience is best placed to guide you through.
Again your solicitor should be experienced in drawing up a transitional partnership agreement as this allows the transfer of any NHS Contract variation to be handled effectively, the NHS Variation needs to be signed by all parties and witnessed (This can be the Practice Manager, Accountant or Solicitor). In effect this is a handover period agreed between the two parties, enabling the core NHS contracts to be taken over to the new provider without any problems.
The CQC doesn’t have to strike fear into your heart, and your last experience of the CQC doesn’t have to be a bad one. Your consultant will work with you to ascertain the exact requirements of the CQC, depending on if, through the process it requires a transfer or brand new registration for the purchasers. The consultant will assist with the filling in and submission of the forms and help the incoming purchaser to prepare for interviews where necessary. The whole CQC process can take up to three months so in reality the forms should be filled and ready to go by the time the Due Dilligence is first submitted.
Your consultant will work with you and the lender. If required, to ensure that they have everything they need to ensure finance. The whole finance process is somewhat more complicated than in the past, but again should take three months from the point the bank says ‘yes this should work’ to ‘when would you like the cash’. This has various key points, but the one that involves you as a purchaser is if the bank request another chartered valuation. Your consultant will liaise with you to organise the appointments and will work with the valuer to ensure they have all the relevant paperwork as well as comparable data to show the market values and how this supports the agreed asset transfer for the practice.
Once a sale in principle has been agreed and if the practice is leasehold then one of the first steps the solicitors will take is to contact the landlord and start to negotiate the required outcome for the lease. This may be a re-assignment of the current lease, or a surrender of the current lease and issue of a new agreement. Either way this is often the hardest part of the transaction to predict timescale wise as it involves another solicitor, that of the landlord, who has no invested interest in proceeding any faster than absolutely necessary! There are things both parties can do to speed this along and your consultant will work with the interested parties to make sure suitable references are supplied, and with you with regards to undertakings. Traditionally any undertaking required is met by the Vendor as the progression of the practice asset transfer is only viable with a suitable lease. However, regardless this process should be started at the beginning of the transaction to reduce the chance of unavoidable delays.
This is the big one! While everyone is desperate to get to completion, Exchange is the point of no return and the first champagne moment of any transaction. This is where the paperwork, contracts and lease is agreed, the bank are happy and the CQC are primed. At this stage the period between exchange and completion may be a month, or in the case of some practices where no consultations with outside parties; such as the NHS, is required, exchange and completion can be simultaneous. Your consultant will advise you as to which path your practice is likely to take.