The importance of due diligenceFeatured Products Promotional Features
Posted by: The Probe 29th November 2017
When buying or selling a practice, making sure you carry out due diligence is key. If you neglect due diligence when going through the buying/selling process, you may end up in a difficult situation with little recourse. Due diligence is a phrase that is so often used by agents, solicitors and the like, yet for many it can be quite daunting to understand what due diligence is and why it is so important.
It will probably surprise most that due diligence starts from the moment you obtain details of the practice. Sales particulars are normally the first item, giving you an insight into the practice, such as its financial position and potential for growth. Many buyers assume that due diligence is a legal process that their solicitor engages in, but this is incorrect. We always recommend that buyers view the practice as many times as they can, to check equipment works, and meet the staff. It also enables the buyer to view the seller’s existing policies and procedures, which they will need to know for their CQC interview.
This process is also incredibly important for a seller. A buyer will ask the seller to give warranties about the practice. Warranties are assurances about the practice, which then give the buyer the ability to sue the seller if there was a breach of those warranties. The best form of defence for a seller is to show that the buyer was made aware of the issue, and one way of doing this is to show the buyer evidence from the due diligence. If a seller fails to supply this, they are effectively selling the practice without any form of protection should there be any comeback by the buyer.
Due diligence can be a laborious task for sellers, and the best advice is to answer the buyer’s questions honestly, efficiently, and with as much information as possible. If a quick sale is needed, questions need to be answered in a timely manner to avoid delays. Due diligence also needs to be well presented – if it is not, then it can often give a poor impression of the practice, which might not necessarily be fair view.
Whilst due diligence is an early part of the sale and purchase process, it is – for both buyer and seller – a continuing task. The buyer is very much entitled to carry out due diligence, asking questions up until exchange of contracts and – in some cases – up until the sale has completed. This is because things may change. Staff may leave, or an electrical report may need updating, and for the seller is also important that they ensure that they have given the buyer the most up-to-date information.
One of the key elements of due diligence is to know what to look for and therefore, it is highly important to engage dental specialists from the outset. Goodman Grant focus entirely on dentistry, and so can provide an expert service, making the due diligence involved in buying and selling a practice far simpler.
Due diligence must be carried out, and must be thorough. Don’t fall into the trap of neglecting yours – follow expert advice, give due diligence the necessary attention during your buying or selling process, and you will be well-protected, should any issues arise, and well-informed about your new business.
Kate Beech of Goodman Grant Solicitors – contact on
For more information, visit the Goodman Grant website at www.goodmangrant.co.uk or call us on:
Leeds office: 0113 834 3705
London office: 0203 114 2133
Liverpool office: 0151 707 0090
Kate Beech Biography
Kate joined Goodman Grant in May 2017 as a Director and deals with corporate transactions
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