Buying or selling a medical, dental or any other healthcare practice can be a daunting task. The extra level of complexity of complying with laws and regulations governing the transfer of ownership of a practice is practically impossible to navigate without the help of a counselor intricately familiar with the process. The importance of engaging an attorney specializing in this unique area of law, working seamlessly with professional valuators, tax advisors and loan specialists is hard to overestimate. We are the counselors who are experienced in the process of buying or selling practices and are here to help.
There are several unique challenges facing buyers and sellers of medical practices. Understanding them is the first step towards turning the complicated and stressful process into a successful, mutually beneficial transaction.
For a prospective practice purchaser, the main challenge is to find the right practice to buy. Professional practice brokers can be a great resource to find a practice for sale. Word of mouth, printed advertisement and online classified sites can provide some good leads. Also, our firm has a wide network of connections that we will tap into to help you find the right practice to purchase. We have helped many prospective practice buyers to acquire solid, reputable practices that remained profitable and rewarding under new ownership.
It is critical for practice buyers to gather as much information as possible about the practice. Not only do we have unparalleled skills and resources to obtain information essential to conduct complete due diligence, but we also have the knowledge and understanding of the industry to make sense of the information provided to give you the full picture.
You should be clear that the practice you are purchasing is properly valued. We will help you review the valuation determinations and point out various hidden costs and expenses that can greatly affect the value of the practice. All practice purchases must be evaluated from the tax standpoint. We will work closely with your tax advisor to determine the tax consequences of the acquisition deal. Moreover, keep in mind that the allocation of the purchase price towards equipment, goodwill and restrictive covenant will greatly impact the post-acquisition tax deductibility. We are intricately familiar with the issues involving purchase price allocation and will, along with your tax advisor, negotiate and structure the transaction to make it most advantageous for you. From the legal standpoint, the acquisition can be structured in one of three ways: a stock purchase, an asset purchase or a merger. Each one of these methods has its unique advantages and disadvantages. We will advise you on the various options available to you and help you chose the right form of acquisition.
Critically, the acquiring business entity must be properly structured to avoid legal and regulatory pitfalls. We will form the right business entity for your situation and draft the necessary partnership, shareholder, membership and other documents regulating the relationships between owners of the new entity. Finally, the process of acquiring practices is highly regulated. The acquiring entity needs to be aware of, and comply with, various reporting requirements, HIPAA rules and other laws and regulations affecting the process. We will make sure that you comply with all legal and regulatory requirements to avoid costly consequences down the road.
Practice sellers must deal with a flood of emotions and the stress of navigating a difficult and unfamiliar process. We will make sure that the legal side of selling the practice is as smooth as possible. Sellers face several unique challenges that can be addressed with the help of a knowledgeable and experienced attorney working in tandem with tax advisors and valuation professionals. It is important to involve an attorney as early as possible in the process.
First, sellers must prepare the proper documentation that will help to maximize the value of the practice. An attorney can be an invaluable resource to help to bring the practice affairs in order to address the issues affecting the purchase price, such as compliance, corporate governance, civil liability and the like. Finding the right buyer with the financial wherewithal to go through with the deal can be the biggest challenge facing a seller. Our firm can tap into our extensive network of connections in the healthcare industry to help you find the right buyer for the practice. We have close relationships with many industry players who will help you find the right match.
It is very important for a seller to conduct preliminary due diligence of the prospective purchaser. Frequently, sales of practices are contingent on the purchaser enrolling as a provider in Medicaid and Medicare programs. Without the proper due diligence, sellers may find themselves in a situation of having entered into a contract and waiting for approvals just to see the deal fail because the prospective purchaser cannot be approved due to negative past history. We will conduct the necessary due diligence to make sure the prospective purchaser is indeed in the position to complete the transaction. Tax considerations of the sale are of critical importance to the seller. We will work closely with the tax professionals to determine the proper form of the transaction. We will also negotiate for the most advantageous allocation of the purchase price from the tax standpoint.
Preserving confidentiality of a prospective deal is a major concern. We will draft and negotiate initial term sheets and other documents to make sure the confidentiality of the transaction is preserved.
Following the preliminary negotiations and having been satisfied with the due diligence, the parties enter into a purchase-sale agreement. Such agreements are overwhelmingly drafted by sellers’ attorneys. The importance of having such an agreement drafted by a knowledgeable and experienced healthcare attorney cannot be overemphasizes. We will draft buy-sell agreements that best protect your interests and bottom line. Post-closing transition is also a very important area of concern for a seller. Having an understanding and experienced attorney on your side will help you avoid regulatory pitfalls and make sure the transition is orderly and proper.
There are many rules and laws to keep an eye on: HIPAA, Medicaid and Medicare regulations, DEA and state licensing board rules, malpractice insurance reporting requirements, to name a few. Miss one critical area of compliance--and you can be faced with costly civil liability claims, administrative claims, and even charges of fraud – with all the resulting headache and expenses. At the end of the day, our goal is to make sure that, regardless of whether you are a buyer or seller, the practice transfer process is as stress-like and rewarding as it can be.
Contact us with any questions or concerns you may have and we will be happy to guide you every step of the way.