Due diligence on a dental practice acquisition needs to cover considerably more than the practice’s accounts. Because most of a dental practice’s value sits in an NHS contract that cannot simply be assigned, in associates whose employment status may not be what the paperwork says, and in a CQC registration that has to transfer correctly before a buyer can lawfully treat a single patient, the standard commercial due diligence checklist used for an ordinary SME acquisition is not enough on its own. This is exactly the kind of transaction where specialist acquisition support pays for itself, since a generic due diligence template will miss the issues that are specific to healthcare contracts. This post sets out what buyers actually need to check, and why each item matters.

For the wider transaction process, see our guide to how to buy a dental practice. For the two areas that most commonly derail a dental acquisition once due diligence is under way, see our posts on the CQC application process and on Units of Dental Activity.

The NHS Contract Itself

If the practice holds an NHS (GDS or PDS) contract, this is usually the single most valuable asset in the transaction, and the one most easily got wrong. Key checks include:

  • How the contract is actually held. Is it held by an individual, a partnership, or a body corporate? This determines the transfer mechanism entirely, whether the buyer will need to be admitted as a partner under the partnership route, or whether the transaction is a share purchase subject to any change of control clause in the contract.
  • Whether the contract has ever been improperly structured. Where goodwill has been moved into a company while the NHS contract stayed personally held with the seller, because GDS and PDS contracts cannot be assigned, this creates a real risk that the contract has been held in breach for some time. This needs to be identified and resolved before exchange, not discovered afterwards.
  • UDA delivery history. Request at least the last two to three years of reconciliation position letters, not just a summary. Consistent delivery in the 96% to 102% tolerance band is the position you want to see. Delivery below 96% in any recent year signals possible clawback exposure, whether already recovered, being disputed, or still to be assessed.
  • Any live action plans, disputes or breach notices. If the practice is currently subject to a mid-year action plan requirement or a disputed reconciliation figure, this needs to be understood and, ideally, resolved or specifically addressed in the sale agreement before completion.
  • The actual contracted UDA rate. This varies significantly between contracts and directly determines the practice’s income per unit of activity delivered. It should be checked against the contract documentation, not assumed from a general market figure.
  • Change of control provisions, for incorporated practices specifically, since many commissioners insert a clause requiring notice or consent before a controlling interest in the corporate contractor changes hands.

Our dedicated post on the NHS dental contract partnership route explains the transfer mechanism itself in full, including the joint liability period buyers need to plan for.

CQC Registration

A buyer cannot lawfully deliver regulated dental activities until their own CQC registration, whether as an individual or as a new provider, has been confirmed. This is not a formality that can be left until after completion: commissioners typically make the NHS contract variation conditional on CQC registration being in place, and the registration process itself can take a considerable period to complete once submitted, so it needs to start early, well before exchange where possible. Due diligence here should cover:

  • The seller’s current CQC registration status, any conditions attached to it, and its inspection history and rating.
  • Any enforcement action, warning notices, or unresolved compliance issues on the existing registration.
  • A realistic timeline for the buyer’s own registration, factored into the transaction timetable from the outset rather than assumed to run in parallel automatically.

See our full guide to the CQC application process for dental practices for the detail buyers need on timing and documentation.

Associates and Staff

Dental practices typically operate with a mix of employed staff and self-employed associates, and due diligence needs to test both categories properly:

  • Genuine self-employed status. Associate agreements labelled as self-employed arrangements do not automatically guarantee that status will hold up if challenged. Reviewing how the relationship actually operates in practice, not just what the paperwork says, matters because misclassification carries real financial and tribunal exposure.
  • Whether associates will continue post-sale, and on what terms. Genuinely self-employed associates do not automatically transfer to the buyer under TUPE on an asset sale, so early, direct conversations with key associates about their intentions are usually necessary rather than assumed.
  • Restrictive covenants. Check that associate agreements contain properly drafted, enforceable restrictive covenants protecting the practice’s goodwill and patient base, since poorly drafted covenants may not hold up if an associate later leaves and competes locally.
  • Employed staff. Standard employment due diligence applies here, contracts, notice periods, any live disciplinary or grievance matters, and TUPE implications for employed staff on an asset sale.
  • GDC registration and performer numbers for all clinical staff, confirmed as current and unrestricted.

Financial and Commercial Position

  • At least three years of full practice accounts, reviewed alongside NHS contract income to understand what proportion of revenue is NHS versus private, and how stable that mix has been.
  • Details of any capitation scheme arrangements (such as Denplan or DPAS) and their terms, since these represent a separate revenue stream with their own transfer mechanics.
  • An inventory of equipment included in the sale, its condition, and any hire-purchase or lease arrangements attached to it, together with maintenance contract details for clinical equipment such as compressors, autoclaves and X-ray machines.
  • Details of the practice premises, whether owned or leased, and if leased, the lease terms, any landlord consent required for assignment, and rent review or break clause provisions.

Patient Records and Data Protection

A dental practice is a data controller for its patient records under UK GDPR, and this needs specific attention in due diligence and in the sale documentation itself:

  • Confirmation of how patient records will transfer and be handled at completion, including the practice’s arrangements with its clinical software provider.
  • Whether the seller has a clean data protection compliance history, including registration with the Information Commissioner’s Office and any history of data breaches or complaints.
  • A properly drafted data-sharing or transfer arrangement forming part of the sale documentation, so that responsibility for patient data before and after completion is clearly allocated between seller and buyer.

Compliance, Complaints and Litigation

  • Health and safety compliance, including current fire, legionella and asbestos risk assessments for the premises.
  • A full history of patient complaints, including any that escalated to the Dental Complaints Service, the Parliamentary and Health Service Ombudsman, or litigation.
  • Confirmation of current professional indemnity insurance for all clinicians, and practice-level public and employer’s liability cover.
  • Any ongoing or threatened disputes, whether with patients, staff, associates, the landlord, or the commissioner.
Dental practice reception and treatment room area during a pre-purchase inspection

What This Means for You

A dental practice acquisition carries risk that sits outside a standard commercial due diligence exercise: the NHS contract’s own transfer restrictions, CQC registration timing, associate employment status, and UDA performance history all need specific, dental-sector-literate attention before exchange. Getting any one of these wrong can mean paying full price for a practice whose most valuable asset, the NHS contract, is worth considerably less than the buyer assumed, or is exposed to a clawback liability that was never priced into the deal.

If you are planning to buy a dental practice and want a due diligence exercise that properly covers the NHS contract, CQC position, and associate arrangements, get in touch with our healthcare team or call us on +44 207 566 1188. You can also reach us at info@gurvelegal.com.