Denplan Launches Partnership Scheme.
Date: 16/04/2015 | Healthcare
Denplan announced last month that it has launched a new dental partnership funding scheme that will see the organisation entering into partnership with dental practice owners.
The scheme is intended to provide an alternative option to principal dentists who are thinking of retiring in the short to medium term.
The scheme will see Denplan’s specially formed company Denplan Partnerships Ltd acquiring a stake in 5 pilot practices in the coming months. The model sees Denplan Partnerships Ltd aquiring a 50% share of existing dental practices, at a price based on a multiple of its profit (agreed with the practice owner and accountants). Denplan will become an equal partner, with the dentist retaining full clinical control of the practice. When the dentist is ready to retire, they can sell their remaining share to another practitioner.
The scheme is only open to Denplan members, and ideally those who plan to retire in the short to medium term from a one or two handed practice, so not everyone will be eligible.
NASDAL, the National Association of Specialist Dental Accountants and Lawyers has welcomed the initiative, announcing that it could “improve the value of private practices”. Alan Suggett, media spokesman for NASDAL and a partner in specialist dental accountants UNW LLP, said “My first impression is that this is a great opportunity for private practice principals… by selling half of their goodwill and retaining the other half…it provides an excellent exit route for those who would prefer their patients to continue to be looked after at an owner managed practice”.
In our view this is certainly welcome development and it may well be an attractive option for some practice owners to consider. It’s certainly not going to replace traditional sales as the most common form of exit, particularly at a time when the market is as buoyant as it has been for many years, but there may be a variety of reasons why it could be a welcome alternative for some. However, anyone who is considering this option will need to be comfortable with the loss of control and change in culture that will inevitably go with it as Denplan clearly won’t part with their cash without a number of controls on the operation of the business going forward. In that regard, it will be interesting to see the investment documentation when it becomes available!
We will be watching closely to see how this scheme is rolled out following its initial pilot scheme. Denplan’s aim is to roll out the scheme to between 100 and 200 practices in the next 5 to 10 years, and clearly a number of these are likely to be in Scotland.