When you’re selling your clinic (you might be selling your Physiotherapy, Chiropractic, Podiatry, GP, Occupational Therapy, Speech Pathology, Osteopathy, Psychology or other type of clinic), it can be a difficult and emotional time. You have often spent many years building your practice, investing in it and working long hours as a clinician & also probably as a manager to make it a profitable and successful clinic. Although not legally required, a lawyer is helpful throughout the sales preparation process and the actual sale – not only protecting you legally, but also ensuring that all practical considerations are taken into account and that you don’t make decisions from an emotional perspective.
There are many important issues that need to be considered when selling your clinic, particularly in regard to ensuring that the Business Sales Agreement accurately reflects your agreement with your clinic buyer.
There are typically four stages to a sale of clinic transaction.
1. Offer: Receiving and accepting an offer from a buyer
When you find a willing buyer, you will often receive from them either a written letter or verbal offer. A written offer is always preferable, as it will include the principal terms and minimise the potential for confusion at a later stage. If you choose to accept the offer, you should also accept it in writing, but importantly, you should express that no legal obligations are to arise until a formal Contract for Sale of Business is entered into by both parties.
You should ensure that these early communications cover off other important considerations for the business. These are outlined in more detail later, but they principally concern matters such as price, assets of the sale, transfer of employees, conditions (financing and/or due diligence), training as part of the sale and any restraints on competing.
2. Exchange: Ensuring the Business Sales Agreement accurately reflects your wishes
You should engage a lawyer once you have agreed to the principal terms of the sale, as you will need to prepare a Business Sales Agreement. If you have already had a formal written Letter of Offer acceptance, it will speed this part up, as a lot of the details of the sale of your clinic will already have been negotiated. A lawyer will ensure that the contract accurately reflects your wishes regarding the clinic sale and can represent you in any further negotiations with the clinic purchaser directly (if unrepresented) or the purchaser’s lawyers.
Once agreement is reached, the parties’ lawyers will finalise the Business Sales Agreement and prepare it for execution (contracts signed by the clinic buyer & seller with deposit paid into the solicitors Trust Account). The clinic purchaser almost always pays a deposit when the contract is formally exchanged.
3. Settlement: Preparing for settlement and transferring the assets of the clinic
Once the contract has been exchanged for your clinic, you will need to commence the process of readying for settlement, including transferring all the relevant clinic assets. The types of things you need to ensure are ready to be transferred for use on and from the settlement date include items such as:
- HICAP’s terminal
- Website & social media
- Patient data base
- Employee details
- Leases, licenses and permits
- Business names
Any security interests or other encumbrances against the clinic or the clinic assets will need to be discharged or released. If you have provided a personal guarantee in respect of the lease of the clinic premises or any other continuing contract, ideally you should seek a release on or before settlement.
4. Post-settlement: Making sure everything is complete
Once the clinic is sold, there will be a number of matters that you need to attend to finalise the sales process. These may include:
- Registering transfers
- Finalising tax returns, activity statements and installment notices
- Cancelling your ABN and your business name (if appropriate)
We hope you found this blog of assistance. If you are looking to sell your Physiotherapy, Chiropractic, Podiatry, GP, Occupational Therapy, Speech Pathology, Osteopathy, Psychology or other type of clinic please get in contact with us. We at Healthcare Practice Sales will guide you through the process all the way to the Letter of Offer & then with recommended legal representation to successful post settlement.