Financial Due Diligence

The process involves analysing financial and supplementary data. We collect documents like accounting records and clinical software reports, then examine revenue streams and expenses to assess profitability. We also identify risks, such as key man dependence, impacting the practice’s stability. This thorough evaluation provides buyers with a clear picture of the practice’s financial health, ensuring informed acquisition decisions.

The timeline of an FDD varies based on factors like practice size, quality of data disclosed, and the speed at which queries are answered. Typically, an FDD spans 4 to 8 weeks, encompassing document collection, data analysis, risk assessment, and report preparation. To prevent delays, it's crucial that the practice is well-prepared for sale. This ensures a smoother process and timely completion of FDD, benefiting both buyers and sellers.

Investors scrutinise various aspects including revenue trends, profit margins, and cash flow stability. They're wary of potential risks like over-reliance on specific staff members, which could affect future returns. Assessing market opportunities for growth is crucial, as is evaluating the condition of assets. Investors also focus on streamlining operations and enhancing efficiency to ensure future profitability, requiring a clear understanding of the potential for improvement within the practice.

Absolutely. The findings of an FDD significantly impact the valuation of a dental practice. In our experience, over 80% of deals either fall through or require price renegotiation post-FDD. This is often because the initial offer is based on an inaccurate or overly simplistic valuation. Uncovering significant issues is common and they ultimately result in a lower valuation. With borrowing costs high, there's now more emphasis on FDD than ever before, ensuring thorough scrutiny before deals are finalised.