Securing Business Acquisition Funding for a Private Medical Practice
Background
Two experienced medical consultants required funding to acquire an established private medical practice. The practice specialises in providing a range of medical treatments, including consultations, minor surgical procedures, and specialist care. With a solid patient base and a strong reputation within the private healthcare sector, the practice presented a valuable investment opportunity.
The consultants were introduced to us through a specialist healthcare accountancy firm, which recognised our expertise in securing funding for medical professionals. Given the financial complexities involved in healthcare acquisitions, the applicants required a tailored approach to structure the financing. They turned to us for guidance on securing the necessary funding to complete the purchase.
The Applicants
Consultant A qualified internationally and relocated to the UK several years ago. They have been a specialist for over a decade and, alongside their hospital consultancy role, have provided private consultations at the practice. Their extensive experience and knowledge of the practice’s operations positioned them well for ownership.
Consultant B qualified in the UK over a decade ago and has been a specialist for several years. They hold multiple NHS consultancy positions and have worked at the practice for some time. Their experience across both NHS and private healthcare gives them a well-rounded perspective on patient care and business management.
Both consultants demonstrated strong financial standings, with significant personal income and assets. Their financial stability and proven track record reassured lenders of their capability to support and successfully operate the practice post-acquisition.
The Practice Acquisition
The medical practice operates across three locations in London, with its main office situated within a prestigious private hospital. It provides a wide range of specialist medical services, from routine consultations to advanced procedures. With an established patient base and a strong referral network, the practice was a highly attractive acquisition opportunity.
The founding consultant, now residing abroad, had gradually reduced their involvement in day-to-day operations, leaving the two applicants to manage key aspects of patient care and business administration. This transition created a natural succession plan, ensuring continuity of service for existing patients.
The agreed purchase price for the medical practice’s goodwill was £300,000, with a funding requirement of £270,000, as the clients wished to contribute 10% towards the transaction. The applicants preferred to structure the acquisition through a holding company acquiring shares in the target business. However, they were open to exploring alternative financing structures that would be most favourable to lenders.
Challenges
Securing funding for the acquisition presented several challenges. Lenders expressed concerns about the practice’s multi-site operation, particularly regarding their inability to secure a charge over any leases. The complexity of a business operating from multiple locations often makes lenders hesitant due to perceived risks in continuity and operational control. Additionally, lenders assessing private healthcare acquisitions must be confident in both the business model and the applicants’ ability to maintain profitability.
Lender Engagement & Solution
We approached multiple lenders, carefully structuring the proposal to highlight the stability, profitability, and growth potential of the practice. By presenting detailed financial forecasts, patient retention data, and operational efficiencies, we reassured lenders about the sustainability of the business.
Furthermore, we worked with legal advisors to clarify the property arrangements, ensuring that lenders understood that, while there were no formal leases in place, the practice could continue operating from its existing locations. To address concerns about security, we structured the funding with personal guarantees from the applicants, providing lenders with the necessary assurance to proceed.
As a result, we successfully secured the full funding request of £270,000 over a seven-year term, enabling the consultants to complete the acquisition of the practice with favourable financing terms.
Outcome
The funding arrangement allowed for a smooth transition of ownership, ensuring business continuity and providing the new owners with financial flexibility for future investments.
With full control of the practice, the consultants are now positioned to expand its services, enhance patient care, and strengthen its reputation within the private medical sector. Their ownership marks an important step in their professional journeys while also ensuring long-term stability for the practice’s staff and patients.