Post-purchase protection

The nightmare scenario for any high street trader buying a business is for the seller to set up the same sort of shop just down the street, and take 90 per cent of his old customers with him.

In the world of dentistry, goodwill represents a significant proportion of a practice’s value, and goodwill and customer loyalty are two sides of the same coin. Prudent practice buyers should therefore always take steps to safeguard their investment from haemorrhaging patients as soon as the change of ownership becomes known. Patients who have confidence in their dentist are quite naturally averse to change. Given the opportunity many will follow the selling dentist if they set up another practice within comfortable travelling distance.

Whilst the buyer is powerless to prevent the patients from exercising their freedom of choice, the insertion of restraining clauses in the sales agreement can prevent the outgoing dentist from establishing another, compatible business in the immediate locality, or within a designated time frame. This allows the buyer to apply for a court injunction against the seller if he or she breaches these conditions.