What to establish before you borrow
- Sight test volume and its trend, not just its level
- The split between GOS and private work, and what each earns per chair hour
- The dispensing conversion behind the testing — the tests are the route to the margin, not the margin itself
- Staff cost including realistic locum cover
- How exposed the location is to a multiple opening nearby
The GOS contract
It does not simply transfer. The model contract permits variation of the contractor's status rather than transfer to an unconnected buyer. Applications and variations go to NHSBSA, and contracting queries to the local ICB. Build the timing into your funding rather than assuming it follows completion automatically.
Common questions
What should the numbers show before I borrow?
Sight test volume and its trend rather than just its level; the split between GOS and private work; the dispensing conversion rate behind the testing; and the staff cost including realistic locum cover. Then the VAT position, because a practice that has never apportioned has a different real profitability from the one its accounts show — potentially better, once corrected. That is value you should not be paying the seller for. Verify each of them; unlike a multiple, they are all things you can check.
What VAT question should I ask the seller?
How they apportion between standard-rated goods and exempt dispensing, and which limb of the VATHLT2190 test they rely on. It is the question almost no buyer asks and it cuts both ways: a seller who has never apportioned may have been overpaying for years, which is value you could recover; a seller with an aggressive split and no evidence is a liability you would be taking on, particularly on a share purchase. Ask for the method in writing and the evidence behind it, not a percentage.
Does the GOS contract come with the practice?
Not as a straightforward transfer. The General Ophthalmic Additional Services Model Contract permits variation of the contractor's status rather than transfer to an unconnected buyer, which shapes how the deal has to be structured. Applications and variations go to NHSBSA, and contracting queries to the local ICB which now manages the GOS sight testing service. Build the timing of that into your funding rather than assuming it follows completion. A delay here is a delay in trading income while the borrowing is already running, which is the worst possible time for it.
How should I think about the price?
Not through a multiple, because there is no published, verifiable multiple for this sector — anything you are quoted is a market opinion and should be attributed to whoever offered it. Think instead about maintainable professional income, the dispensing that follows the testing, how exposed the location is to a multiple opening nearby, and what the VAT position really is once corrected. Establish it before you agree a price rather than after completion. Those four together tell you more than any multiple would, and unlike a multiple every one of them can be verified from the practice's own records.