Case Study
Optimising capital structure and unlocking growth in the UK healthcare sector
VAR Capital acted as sole adviser to restructure a profitable dental group, consolidating three legacy banking relationships into a single growth facility with a high street lender that unlocked owner liquidity without equity dilution.
Executive Summary
An established, highly profitable dental group with over 450,000 patients across West London and South Wales required a comprehensive debt advisory and corporate restructuring solution.
Despite highly cash-generative operations, the business was severely constrained by three separate legacy banking relationships that blocked distributions and lacked growth funding. VAR Capital stepped in as sole adviser, running a competitive lender process to refinance and consolidate the group's debt under a single facility with a high street lender. This restructuring unlocked substantial cash liquidity for the owners without equity dilution, reduced the cost of capital, and secured a committed growth facility to fund an active acquisition pipeline.
The Client
The client is an established and profitable dental group serving an extensive patient base of over 450,000 individuals across West London and South Wales.
The business benefits from remarkably strong underlying fundamentals, backed by an EBITDA-to-cash conversion rate exceeding 88 percent. A stable foundation of NHS-contracted income provides predictable revenue streams, representing approximately 85 percent of the group's total income. The owners were seeking to extract meaningful liquidity from their cash-generative operations and establish a platform for long-term succession planning, all without relinquishing operational control of the company.
The Challenge
Despite the group's exceptional financial health, its long-term strategic ambitions were blocked by a complex corporate structure that created operational and tax inefficiencies.
This fragmentation was compounded by three separate legacy banking relationships accumulated through historical acquisitions. Each of the existing lenders proved entirely unsupportive of growth, corporate distributions, or further market consolidation. Crucially, these lenders blocked any cash-out distributions to the owners, completely trapping capital within the business despite its high cash generation. Furthermore, this fragmented banking framework meant the group had zero access to growth capital, leaving them unable to capitalise on an active acquisition pipeline of single-site practices with retiring owners.
The Approach
VAR Capital acted as the sole financial adviser to the owners, leading a comprehensive debt advisory and corporate restructuring process.
To break the lending gridlock, our team initiated a competitive lender process to replace the unsupportive legacy banking arrangements. We successfully secured a comprehensive refinancing package with a high street lender, consolidating all three disparate banking relationships into a single, growth-oriented facility. Concurrently, VAR Capital structured a new, tax-efficient holding company explicitly designed to support future practice acquisitions, protect owner distributions, and facilitate long-term succession planning. This strategic recapitalisation successfully expanded the group's leverage capacity by 70% at a lower cost of capital, while simultaneously releasing a substantial cash distribution to the owners.
The Outcome
The completed restructuring delivered immediate financial flexibility to the group's founders, allowing the owners to achieve meaningful personal liquidity with absolutely zero dilution of their equity shareholding.
Operationally, the business has been fully repositioned to execute an acquisition-led growth strategy within a highly fragmented UK dental market, where over 65 percent of practices remain independent single or dual-site operations, providing an attractive pipeline of targets. With a cleaner, more efficient corporate structure now in place, the group possesses a robust framework for long-term succession planning. Backed by a stronger financial platform, a reduced cost of debt, and a committed banking partner in a high street lender aligned with their core ambitions, the group has already identified three immediate target practices and has retained VAR Capital in an ongoing advisory capacity to guide their next phase of expansion.