At some point during their career, many physicians will face the prospect of selling their medical practice. Whether the result of a voluntary decision (such as a well-earned retirement) or a less happy situation (such as illness, divorce, disability), the sale of a medical practice needs to be structured to best realize the selling physician’s two main goals: maximum profit and minimum post-sale liabilities.
The following are mistakes to avoid when selling a healthcare practice:
Mistake 1 Agreeing on Price Before Consulting a Valuation Expert
Mistake 2 Agreeing on Terms and Conditions Before Consulting an Attorney
Mistake 3 Making Representations and Warranties That Cannot Be Supported
Mistake 4 Failing to Require Certain Representations and Warranties From the Buyer
Mistake 5 Not Reviewing the Assignability of Key Third-Party Contracts
Mistake 6 Getting Inadequate Security for Seller Financing
Mistake 7 Agreeing to an Unrestricted Noncompetition Clause
Mistake 8 Agreeing to Buyer-Controlled “Holdbacks” From the Purchase Price
Mistake 9 Not Including Termination Provisions in the Agreement
Physician owners can avoid many of these potential mistakes with guidance from an experienced healthcare business broker and transactional attorney, proving that, in a business transition as well as in medicine, an ounce of prevention is worth a pound of cure.