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Post-Sale Considerations

Originally posted 10/10/07

Purchasing a practice can be the best investment you may make in your own career.  But, like most things, if it’s been handled and done properly. Most doctors focus on “negotiations”, with an emphasis on the purchase price.  While this is an important consideration, what happens after the sale itself is often overlooked and can cause a myriad of problems and heartache.
These “issues”, are rarely a nuisance if properly addressed in the sale contract, but unfortunately become overlooked by less experienced advisors.
First of all, one needs to understand the ramifications of the contract itself and who it impacts most.  For the seller, the importance of the buy-sell agreement lies in correctly stating the price, closing date, method of payment and tax allocation.  For the buyer, the contract may mean everything – the restrictive area in which the seller is prohibited from opening another practice, avoidance of liability for unsuspecting bills and creditors of the seller, indemnity from liability as it relates to prior services rendered to a patient, etc.
We have found that many purchasers have a contract drafted to address the financial issues of acquiring the practice. What about the non-financial issues? Some of the post-sale issues may determine the ultimate success or failure of a practice acquisition.  Remember, after the sale is consummated, the seller has usually “moved on” and is no longer available.  It is better to have the buyer’s concerns addressed in the buy-sell agreement as a condition of the transaction than to rely on the seller’s good intentions after the fact.
It all seems so simple in the beginning. Negotiate the purchase price and sign the contract.  Unfortunately in many cases that’s when the problems can really begin.  The importance of determining the post-sale plans of the seller before purchasing a practice and the need to have a contract that protects the buyer after the sale, cannot be over-emphasized.
At Practice Sales & Appraisals, we pride ourselves at being the leaders in safe, carefully planned and thoughtful transactions, in which the seller reaps the benefits of the sale and the buyer secures the practice of his/her dreams, with no surprises or unexpected events.  In this area, the proof is in the numbers!  Our portfolio of borrowers (buyers) has consistently performed #1 for transactions handled by practice brokers with each and every lender.  It’s not coincidence, luck or magic…but rather attention to each and every detail, experience in planning ahead, connecting the right buyer with the right practice, making sure there are no surprises and taking the responsibility to handle the transaction as though our family members were both buying and selling.

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