MAF HEALTHCARE TALKS...
Bank appetite remains strong in the dentistry sector despite service in the mid-market being patchy…
The dental sector is a strong one in terms of raising finance, with banks and specialist funders dedicating a lot of resource to attract business.
Attending one of the many dental showcases throughout the UK only serves to drive this point home, with most of the floorspace taken up by funders and brokers.
With funding available of up 100% of purchase price of a practice, asset finance houses who will fund anything that does not form part of the fabric of the building and specialist funders who will even cover the personal tax liabilities of dentists, there is no shortage of funding.
The sub £2m space is well-covered by business banking professionals and brokers – the metrics are formulaic, which provides the level of comfort they require to structure transactions, complete quickly and ultimately provide good customer service.
However, the one area where there is strong gap in service is in the mid-market of funding i.e. operators who have more than one dental practice and/or require funding of anywhere between £2m and £50m.
We continually get feedback from operators regarding the challenges of raising finance for transactions in excess of £2m. The credit policies become more conservative, with metrics and business plans that are more complex.
These transactions require brokers who take a consultative and relationship-led approach; experienced professionals who have operated comfortably in that space for several years and can leverage relationships with the right contacts are a must.
To obtain preferential terms and complete quickly in that space, strong relationships with the banks’ heads of healthcare, valuers and healthcare-focused lawyers are vital. These things should not be left to chance, especially where the opportunity cost is equivalent to the potential annual earnings of a target practice or group of practices.
Above £50m and we see strong appetite from institutional funds and investment banks, who play a vital role in dental businesses that scaling up on a more aggressive growth trajectory.
Again, engaging with a professional who takes a consultative approach and leverages direct relationships with key stakeholders is vital.
Director of Healthcare Finance
Call: 07872 180039