Full vs Partial Dental Practice Acquisition

Quick Answer

A full acquisition transfers all of the agreed ownership or business assets to the buyer, while a partial acquisition transfers only an agreed portion and leaves the seller with a continuing economic or governance interest. A full sale usually creates a clearer exit. A partial sale can release capital while preserving future upside, but it requires more detailed rules for shared ownership.

The choice should follow the owner’s goals, not the buyer’s preferred template. An owner seeking retirement may value certainty and simplicity. An owner who wants support, growth and a later exit may prefer a partial transaction.

What does a full acquisition include?

“Full” does not necessarily mean every item connected to the practice. The parties must define the transaction perimeter.

A full acquisition may transfer:

1. All eligible ownership interests in the relevant practice structure.
2. The operating assets and goodwill of the business.
3. Equipment, furniture and stock.
4. Brand, domain, telephone numbers and marketing assets.
5. Selected contracts, licences and lease rights where transferable.
6. Employees or employment obligations as provided by law.
7. Debtors, creditors or working capital if agreed.

The seller may still retain the property and lease it to the buyer. Historic professional liabilities may also remain with the responsible practitioner, depending on law and insurance. “Full sale” should therefore never replace a detailed schedule of included and excluded assets and liabilities.

What does a partial acquisition include?

A partial acquisition can take several forms. The buyer may acquire a percentage of an eligible entity, acquire selected business assets, enter a partnership or use another professionally compliant structure.

The seller retains some economic interest, control rights or both. These are not the same. A seller can retain 30% of the economics but have limited voting power, or retain strong rights over specific reserved matters despite holding a minority.

The structure must comply with South African professional rules. Because dentistry is regulated, the parties should obtain advice on ownership, corporate involvement, billing, fee sharing and clinical governance before agreeing percentages.

When is a full sale more suitable?

A full sale may be more suitable when:

1. The owner wants maximum liquidity at completion.
2. Retirement or relocation is close.
3. The owner no longer wants business risk.
4. There is no appetite for shared governance.
5. The buyer has funding and can take control.
6. The practice is ready for transfer.
7. The seller wants a defined clinical role without ownership responsibilities.

The owner can still continue practising under a sell and stay agreement. Selling ownership and stopping clinical work are separate decisions.

When is a partial sale more suitable?

A partial sale may be more suitable when:

1. The owner wants to release some capital but not exit completely.
2. The practice needs a partner’s systems, team or funding to grow.
3. The owner believes future value will increase.
4. A successor is buying in gradually.
5. The parties want to test a long term partnership.
6. The owner wants a staged retirement.
7. Full buyer funding is not yet available.

Partial acquisition can align incentives, but it also prolongs exposure. The seller remains affected by future performance, funding decisions and the relationship with the buyer.

How does control change in a full sale?

In a full sale, the buyer normally controls the acquired business after completion, subject to law and any continuing clinical agreement. The seller may remain as a dentist, adviser or property landlord without retaining ownership control.

The agreement can still protect transition matters. For example, the buyer may commit to retain a name for a period, employ specified staff or consult the seller about major changes during an earnout. These protections must be explicit and enforceable.

Clinical independence remains governed by professional obligations. Ownership control does not permit improper interference with a practitioner’s clinical judgement.

How is control shared in a partial sale?

Shared ownership requires a governance map. At minimum, agree:

1. Board or management representation.
2. Voting thresholds.
3. Reserved matters requiring both parties’ consent.
4. Budgets and business plans.
5. Appointment and removal of key people.
6. Borrowing and capital expenditure.
7. Opening or closing locations.
8. Distributions and retained earnings.
9. Related party fees and central service charges.
10. Clinical governance and professional accountability.

Minority ownership without information and consent rights can leave the seller exposed but powerless. Excessive veto rights can make the business impossible to operate. The balance should reflect the economic deal and practical roles.

How does payment differ?

A full sale may pay more total cash because the buyer acquires all agreed value. A partial sale pays for the portion acquired, while the seller keeps a continuing interest.

Either structure may include cash, deferred consideration, seller finance or an earnout. Do not assume that a partial sale automatically means less risk. The retained interest may be difficult to sell, subject to future dilution or dependent on group performance.

Ask:

1. How was the whole practice valued?
2. Is the same per unit value used for the partial interest?
3. Is a control premium or minority discount applied?
4. How are debt and working capital treated?
5. What fees will the buyer or group charge after completion?
6. How will future distributions be decided?
7. Who funds growth and what happens if one party cannot contribute?

What future upside can the seller retain?

In a partial acquisition, the seller may benefit if the practice grows and the retained interest is later sold at a higher value. This upside is only meaningful if the later value can be measured and realised.

The agreement should define:

1. When either party can require a later sale.
2. How the later price will be calculated.
3. Whether value is based on the local practice or wider group.
4. Treatment of group fees and central costs.
5. Access to financial information.
6. Rights if the group is sold.
7. Rights of first refusal or first offer.
8. Tag along and drag along mechanisms where appropriate.
9. What happens on death, disability or loss of registration.

A promise that the retained stake “will be worth more later” is not enough.

What is a staged acquisition?

A staged acquisition transfers ownership in planned steps. For example, the buyer may acquire 60% now and the remaining 40% after two or three years under an agreed valuation formula.

This can help with succession and funding. It also allows the seller to support transition and share in growth. The risk is that the parties may disagree later about value, performance or readiness.

Fix as much as possible at the start:

1. Dates or trigger events for later stages.
2. Put and call rights.
3. Valuation formula and accounting policies.
4. Minimum or maximum prices if appropriate.
5. Funding obligations.
6. Consequences of breach.
7. Treatment of employment termination.
8. Dispute resolution.

How does an earnout differ from retained ownership?

An earnout is a contractual right to additional purchase price if conditions are met. Retained ownership is a continuing interest in the business or entity. They create different rights, risks and tax consequences.

An earnout holder may receive no voting rights and may depend on the buyer’s reporting. A continuing owner may have information, voting and distribution rights but also face future capital calls or liabilities.

Some transactions include both. This increases complexity and should be modelled under good, expected and poor performance scenarios.

What are the tax implications?

Tax depends on what is transferred, who sells, how payments are classified and when amounts become due. A full asset sale, partial interest sale, share transaction, earnout and later buyout may each produce different outcomes.

VAT may also be relevant, including possible zero rating where a qualifying enterprise is transferred as a going concern and the statutory requirements are satisfied. Property can introduce additional tax and transfer considerations.

Obtain tax advice before signing heads of terms. It is often difficult to repair an inefficient structure after the commercial price has been agreed.

What are the employment implications?

A transfer of a business as a going concern may trigger section 197 of the Labour Relations Act. A partial interest transfer may or may not involve a change in employer, depending on the structure.

Clarify:

1. The employer before and after completion.
2. Transfer of leave, benefits and service.
3. Responsibility for historic claims.
4. Changes to reporting lines or roles.
5. Communication and consultation.
6. Treatment of practitioner contractors.

The owner should not change employment terms simply to make the business appear easier to sell without advice.

What happens if the partners disagree?

Partial ownership must include a deadlock process. Options can include escalation to named leaders, mediation, expert determination for technical matters, buy and sell mechanisms or a sale of the business.

The mechanism should suit the size and nature of the practice. A complex corporate formula can be impractical for a small practice, while a vague agreement to “discuss in good faith” may provide no solution.

Clinical disputes require separate governance because patient care cannot wait for shareholder resolution.

What should happen if one party wants to leave?

The agreement should cover voluntary exit, retirement, death, disability, insolvency, misconduct, loss of registration, relationship breakdown and a buyer change of control.

Define:

1. Who may buy the departing interest.
2. How value is calculated.
3. Whether discounts apply in different scenarios.
4. Payment timing and security.
5. Continuing restraints and patient communication.
6. The effect on clinical employment.
7. Treatment of unpaid earnout or seller finance.

An exit mechanism is not pessimistic. It is a core part of a workable partnership.

How does Mia approach full and partial acquisition?

Mia Healthcare says full sale, partial sale and earnout structures can be considered. It also allows owners to take standalone services or work through a service to acquire period before any transaction.

The model can suit an owner who wants to test operational fit and improve reporting before deciding how much to sell. It can also suit an acquisition ready owner who wants a direct conversation.

The final percentage, price, control and continuing role are negotiated. Mia’s public description is not an offer to buy every practice, and submitting information does not commit either party.

How should you choose?

Compare both options under five outcomes:

1. Cash and certainty today.
2. Ownership and control after completion.
3. Exposure to future risk and upside.
4. Your desired clinical and management role.
5. Ease and certainty of final exit.

Model the result in three scenarios. If performance grows, remains flat or declines, what will you receive, what will you control and what obligations remain? A decision that only works in the optimistic case is fragile.

What should you do next?

Ask advisers to prepare a side by side model showing net cash, retained value, control, future funding, clinical income and exit rights under a full and partial transaction. Use the same operating assumptions so the comparison is meaningful.

To discuss full, partial or service to acquire options, visit www.mia-healthcare.com or WhatsApp Dr Zane Stenning on +27 65 536 1760.

Important note: This article provides general information, not legal, tax, valuation, accounting, employment or financial advice. Full and partial acquisitions must be structured for current professional rules and the facts of the practice.