If your practice does NHS work, you're running two kinds of business under one roof. The NHS work is paid for under a contract with the NHS, and the private work is paid for by patients. A buyer looks at each differently, and the NHS contract comes with its own rules about who can hold it. Those rules shape the whole sale, so they're the place to start.
This guide covers dental practices in England. It explains CQC registration and what can happen to a GDS contract or a PDS agreement, then private patients, associates, the premises and what a buyer checks. It doesn't give valuation multiples, and it doesn't cover tax.
CQC registration follows the legal entity
Dental practices register with the Care Quality Commission (CQC) for the regulated activities they carry on, usually treatment of disease, disorder or injury and surgical procedures. CQC registers the legal entity that provides the care, not the people who own it. So what happens on a sale depends on who the provider is now.
- You as an individual dentist. You're registered in your own name. A buyer can't take over your registration, so they'll need their own.
- A partnership. The partners' names are a condition of the registration, so a change of partners needs an application to CQC.
- A company. If a buyer buys the shares, the company stays registered, but CQC must be told about new directors and any new nominated individual. A company must also have a registered manager.
Where a new legal entity takes over, CQC's sale and transfer process lets the buyer's application and yours be assessed together, so patients can carry on being treated. Our guide to selling a care home goes through that process and the registered manager's position in more detail, and the same rules apply to dental practices. CQC's process covers registration only. It doesn't deal with the NHS contract, which is a separate matter with the NHS.
GDS contracts and PDS agreements
NHS dental work is done under a General Dental Services (GDS) contract or a Personal Dental Services (PDS) agreement. NHS England is responsible for commissioning NHS dentistry, and since April 2023 it has delegated that work to integrated care boards. In this guide, the commissioner means whichever body manages your contract.
| Rule | GDS contract | PDS agreement |
|---|---|---|
| Time limited | No, it continues until it's ended | Yes |
| Who can hold it | An individual dentist, a partnership with at least one dentist, a dental corporation or a limited liability partnership | Individuals including dentists, a dental corporation, a company limited by shares or a limited liability partnership, among others |
| Partnerships | The contract is treated as made with the partnership | Not treated as made with a partnership, so each individual signs |
An NHS contract can't be sold like other assets
Moving a contract from one contractor to another is a novation. NHS England's policy book for commissioners explains that a novation ends the old contract and creates a new one on the same terms, and that it counts as awarding a new contract, so procurement law may apply. The policy book says novation is at the commissioner's discretion, and a request could lead the commissioner to put the contract out to tender instead.
When it considers a request, the commissioner can look at things like these.
- Whether the proposed new contractor is eligible to hold the contract. If it isn't, the request must be refused.
- Whether the current contractor owes the NHS money, for example for work not delivered in earlier years.
- Whether there are open breach or remedial notices, or unresolved CQC issues.
- Whether the current contractor should guarantee the new contractor's performance.
That's why the route to selling depends so much on who holds the contract now. Our guide to share sales and asset sales covers the two structures in general.
If you hold a GDS contract yourself
Under the GDS regulations, a dentist who holds a contract as an individual can bring in partners. You give the commissioner written notice, signed by you and the incoming partner, at least 28 days before the date you want the change to happen. The notice confirms the new partner is eligible. If the commissioner is satisfied, it confirms in writing that the contract continues with the partnership.
A partnership can later go back to a single contractor, again on at least 28 days' notice signed by all the partners, as long as the partner who continues is a dentist. Put together, those two steps give a route for a sale. The buyer joins you as a partner, then you leave and the contract carries on with the buyer.
Each step needs the commissioner's checks. The policy book says the change should take effect only once those checks are done and CQC registration for the new arrangement is in place, and that procurement law can be relevant when a new contracting party is added. PDS agreements work differently. They aren't treated as made with a partnership, and adding an individual to an agreement needs the commissioner's written consent.
If a company holds the contract
If your company holds the contract, a buyer can buy the shares and the contract stays where it is. The policy book says a change of directors isn't a novation, because the contract is held by the company, although the commissioner will check that new directors meet the eligibility and suitability rules.
Read the paperwork from when the contract moved into the company. NHS England's template novation agreement includes a change of control clause, which means the company can't change its shareholders without the commissioner's prior consent. That consent shouldn't be unreasonably withheld or delayed, but you still need it. The same agreement can include a guarantee from the original contract holder, so check whether you'd still be guaranteeing the company's performance after you sell.
Moving a contract from a company back to individuals, or from one company to another, is a novation, with everything that comes with it.
Your private patients
Private income has no NHS contract behind it. It depends on patients choosing to stay after you've gone. A buyer will look at how many patients are active and how often they come back. They'll also look at how much income comes from monthly payment plans, which recur, compared with one-off treatment.
If you run a payment plan through a plan administrator, check how the plan and the patients' payments would move to a buyer in an asset sale. Patient records are personal data, and health data at that. Moving them to a buyer is data sharing, and the Information Commissioner's Office expects it to be part of due diligence, with a lawful basis and a plan for telling patients.
Associates, nurses and the rest of the team
Your associates treat many of the patients a buyer is paying for, so expect their agreements to be read closely. A buyer will want to know these things.
- The notice each associate has to give, and whether any have said they'll leave.
- Any restrictions on treating the practice's patients after they leave.
- Whether the agreements say anything about a change of owner.
- How the associates work in practice, since GOV.UK points out that someone can have a different employment status in employment law and in tax law.
Under the GDS regulations, a dentist can only perform NHS services under the contract if they're on the NHS dental performers list and not suspended from it, so a buyer will check each associate's entry.
In a share sale, employed staff such as dental nurses and receptionists stay employed by the company. In an asset sale, they usually transfer to the buyer on their existing terms under TUPE. Our guide to TUPE when you sell a business covers what that involves.
The premises
If you own the building, you can sell it with the practice, or keep it and let it to the buyer. If you lease it, the buyer will check how long is left and the rent, and whether the landlord's consent is needed to assign the lease or for a change of control.
The premises matter to the NHS and to CQC as well. Your address is a registered CQC location. If a buyer wants to move the practice, the policy book says the new premises need CQC registration before the NHS contract is varied and patients are seen there.
What a buyer will check
- The NHS contract, its variations, any novation agreement and any guarantee you've given.
- How well the contract has been delivered in recent years, and any money owed back to the NHS.
- Any breach or remedial notices from the commissioner.
- CQC registration, its conditions and recent inspection reports.
- Associate agreements, staff contracts and performers list entries.
- Private fees, payment plan membership and how both have changed.
- The lease or title, and the condition of the surgeries and equipment.
- Patient records, complaints and your data protection arrangements.
Whatever a buyer pays above the value of the equipment and other assets is goodwill. Our guide to goodwill explains how a buyer works out that part of the price.