When selling a dental practice, there are many considerations. What will the sale price be? How will I find a buyer? Will I need to work as an employee after the sale? Most of these are obvious, and if you use a broker, will be addressed by their form documents. Here are 3 often overlooked considerations that to keep in mind when selling your practice.
When selling a practice, the transition between care providers is often overlooked or neglected. The assumption is a brief overlap in practice will help with a smooth transition, however, an overlap alone often is not enough. There can be differences in plans for care as well as differences in how a dentist runs an office. Failure to address these differences can create unforeseen issues, and potentially create a perception of misrepresentation of a practice. To ensure the transition between dentists runs smoothly, it is important for the two professionals to be on the same page. The ultimate goal is as seamless a transition as possible for staff, patients, and dentists alike.
I have found that when the buyer and seller sit down together and construct a transition plan the transition runs much smoother. The transition plan will be different for each transaction depending on the specifics of the sale. For instance, if the seller is to stay on for 6 months, the transition plan will look much different that if the seller is to continue working for 2 years. Ideally, the plan should lay out the expectations and responsibilities of each dentist and contain mechanisms for accountability. The important thing is to make a plan and stick to it.
If you hire a broker, or your seller has hired a broker, it is important to be aware of the brokers role in the transaction. Their primary objective for the broker is getting the sale completed, that is how they get paid. The broker, by the nature of their dual representation, cannot simultaneously represent the best interests of both the buyer and seller. The two parties’ interests are inherently at odd with one another when it comes to the sale. The buyer wants the best deal possible with terms that benefit them, while the seller wants top dollar with as little restriction or hold over provisions as possible.
The broker may be able to facilitate a deal, but is not acting in the interests of both parties equally. Regardless of whether you are buying or selling a practice, the broker’s interests will be conflicted by their primary interest of completing the deal. That being said, you need to make sure the terms of the deal are constructed in a way that you are comfortable with. I highly recommend retaining independent counsel to review and negotiate the documents of the sale to ensure you know exactly what to expect from the transaction and alleviate possible conflicts down the road.
A well-planned transition will cover most aspects of the professional relationship after the sale is completed. If, however, you did not construct a transition plan, and you did not retain independent counsel to represent your interests in the sale, it isn’t too late. You can still consult the documents for the sale to know what duties and responsibilities each party has after the sale. If you do not understand the content of the documents, you should consult with a legal professional. The documents for the sale should provide guidance as to the rights and expectations of the buyer and seller after the conclusion of the sale.
The key to a successful transition is proper planning and organization between the dentists. Both parties should retain independent counsel to negotiate the terms of the deal, and the dentists should be sure they fully understand the contents of the sale documents. When you are ready to purchase or sell a practice, be sure to plan ahead and consult with independent counsel. Feel free to reach out to the attorneys at Loop Legal PLLC, we are always happy to help.