Whether you are buying into an existing practice or you are buying a practice as a sole practitioner, this is a big investment and one that has to go smoothly. It takes time and research to find the right practice but once you have located it, there are several steps in the process to close the deal. One of them is having a sound practice purchase agreement in place and understanding what everything in the agreement means.
Having an attorney assisting you with the purchase of a healthcare practice can be beneficial for many reasons including helping you navigate the legalities of the process and ensuring you are protected throughout. Marlene Leiva, of the Los Angeles practice purchase agreement law firm, Leiva Law, has more than two decades of experience helping healthcare professionals draft effective purchase agreements and assisting them throughout the purchasing process.
The Process of Purchasing a Practice
Writing a letter of intent usually starts the process and shows that you intend to make a purchase of the California dental practice you chose. During this time, each party involved in the potential transaction will negotiate the terms and when an agreement is made, sign the letter of intent. From here, formally putting the time and money into establishing a comprehensive contract will come next.
Due diligence will take place when a buyer takes the time to research the practice and get a full understanding of its financial, operational, and legal aspects. This helps the buyer know what they are getting into and may confirm their interest or give them enough information to walk away from a deal.
Should a buyer want to move forward, knowing the various elements of the asset purchase agreement is essential. Something that can hold up the process of finalizing a sale and advancing a purchase to the final stages would be contingencies that are included in the agreement. Contingencies are the different terms of an agreement that have to happen before the purchase can go through. Should contingencies not be honored, then a buyer has no legal obligation to continue with the purchase.
Likewise, non-compete clauses may be included in an agreement that limits a seller from engaging in certain activities in a geographic area for a specified amount of time. Non-compete clauses help buyers have confidence that they will not make a purchase that will then be rivaled by an established dentist in the same location. To ensure that a buyer has a fair playing field non-compete clauses must be detailed and precise concerning what a seller can and can not do.
A purchase agreement must also explain how the costs of repairs or defective dental work by a selling provider will be handled and paid for. Similarly, standard warranties should be included that show where the financial standing of the dental office, as well as the state of the seller’s license.
Finally, a full rundown of the practice’s accounts receivable should be clear. It is imperative to have a plan in place for how any outstanding balances that are due will be handled. Also, the bills and overhead that the practice has such as its lease terms must also be documented.
Speak to an Attorney at Leiva Law Firm Today
Making the transition to dental practice ownership is an exciting step forward for one’s professional career. However, several important steps have to happen and must be done with the utmost attention to detail. The purchase agreement is a prime example. For help with your California dental practice purchase please call Leiva Law Firm today at (818) 519-4465 to schedule a free consultation.