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Legal Strategies for Negotiating the Best Deal When Selling Your Plastic Surgery Practice

Legal Strategies for Negotiating the Best Deal When Selling Your Plastic Surgery Practice

Legal Strategies for Negotiating the Best Deal When Selling Your Plastic Surgery Practice

Introduction

Negotiating the sale of your plastic surgery practice is a pivotal moment in your career, and it’s essential to approach it with careful planning and legal expertise. A successful negotiation can maximize your financial gain and ensure a smooth transition for both you and the buyer. In this blog post, we will delve into the legal strategies and key considerations for negotiating the best deal when selling your plastic surgery practice.

Establish Clear Objectives and Priorities

Before entering negotiations, it’s crucial to establish clear objectives and priorities for the sale. Consider the following questions:

What are your financial goals for the sale, and what is the minimum acceptable purchase price?
Are there specific terms or conditions that are non-negotiable for you, such as post-sale involvement in patient care?
How important is the preservation of your practice’s reputation and patient relationships?
Do you have a preference for the type of buyer, such as another plastic surgeon, a medical group, or a private equity firm?
Having a well-defined set of objectives and priorities will guide your negotiations and help you make informed decisions throughout the process.

Assemble a Skilled Negotiation Team

Negotiating the sale of your plastic surgery practice is a complex task that requires expertise in healthcare transactions, legal matters, and financial considerations. To assemble an effective negotiation team, consider the following key members:

Healthcare Attorney: A healthcare attorney with experience in practice sales is essential to navigate the legal intricacies of the transaction, ensure compliance with healthcare regulations, and draft the necessary legal documents.

Financial Advisor: A financial advisor can provide valuable insights into the financial aspects of the deal, help assess the practice’s value, and advise on tax-efficient strategies.

Practice Valuation Expert: Engaging a practice valuation expert can help you determine the fair market value of your practice, ensuring that you receive a competitive purchase price.

Transaction Advisor: A transaction advisor or broker can facilitate negotiations, coordinate due diligence efforts, and help identify suitable buyers.

Having a skilled negotiation team will ensure that your interests are protected and that you have access to the expertise needed to secure the best deal.

Understand the Sale Structure

The structure of the sale can significantly impact the negotiation process and the final terms of the deal. Two common sale structures for a plastic surgery practice are asset sales and stock/share sales:

Asset Sale: In an asset sale, individual practice assets, such as equipment, patient records, and goodwill, are sold. This structure allows for flexibility in allocating the purchase price among different assets, potentially reducing tax liabilities for both parties.

Stock/Share Sale: In a stock or share sale, ownership interest in the practice entity is transferred. While this can simplify the transaction, it may result in different tax consequences and liabilities for the parties involved.

Understanding the pros and cons of each structure and their potential impact on taxation, liabilities, and post-sale obligations is essential for effective negotiations.

Negotiate Key Terms of the Purchase Agreement

The purchase agreement is the central document that outlines the terms and conditions of the sale. Key terms to negotiate include:

Purchase Price: Determine a fair and competitive purchase price for your practice, taking into account the value of tangible assets, goodwill, patient records, and other factors.

Payment Structure: Negotiate the payment structure, including the initial down payment, installment payments, and any contingencies based on future practice performance.

Post-Sale Involvement: If you wish to continue practicing part-time or providing guidance to the buyer after the sale, clearly define your post-sale role and compensation.

Liabilities and Indemnification: Address which liabilities, if any, the buyer will assume, and establish indemnification provisions to allocate responsibility for potential legal issues arising after the sale.

Patient Transition: Outline the process for transitioning patient care, notifying patients, and addressing any patient preferences regarding their choice of healthcare provider.

Non-Compete Agreements: If you plan to retire or pursue other opportunities in the same geographic area, negotiate non-compete clauses to protect the buyer’s interests.

Contingencies: Specify any conditions that must be met for the sale to proceed, such as obtaining financing, regulatory approvals, or the successful completion of due diligence.

Engaging an experienced healthcare attorney to draft and negotiate the purchase agreement is crucial to ensure that your interests are protected and that the agreement complies with all relevant laws and regulations.

Conduct Comprehensive Due Diligence

Due diligence is a critical phase in the negotiation process. Both you, as the seller, and the buyer should conduct thorough due diligence to identify any potential issues and opportunities. Due diligence involves:

Financial Records: Provide access to financial statements, tax returns, accounts receivable, and billing records for the buyer’s review.

Legal Documents: Share contracts, leases, licenses, permits, and malpractice insurance policies for examination.

Patient Records: Ensure that patient records are complete, accurate, and compliant with HIPAA regulations.

Staff and Employment Agreements: Provide access to staff contracts, non-compete agreements, and any employment-related matters.

Insurance Coverage: Clarify the extent and adequacy of malpractice insurance coverage, tail coverage options, and potential liabilities.

A comprehensive due diligence process helps both parties make informed decisions and minimizes risks during negotiations.

Conclusion

Negotiating the sale of your plastic surgery practice requires careful planning, a skilled negotiation team, and a thorough understanding of the legal aspects of the transaction. By establishing clear objectives, assembling the right team, understanding the sale structure, negotiating key terms, and conducting comprehensive due diligence, you can position yourself for a successful negotiation and secure the best deal possible. Engaging a healthcare attorney with expertise in practice sales is essential to protect your interests and ensure that the negotiation process complies with all relevant laws and regulations. With the right legal support and a strategic approach, you can achieve a successful practice sale that aligns with your objectives and financial goals.

Whether you’re a property owner, investor, or business owner, Real Estate Law Corporation™ is your trusted partner on the path to legal success. Contact us today to embark on a journey of exceptional legal support. Our team of seasoned attorneys brings decades of experience to every case, demonstrating a profound understanding of real estate law, transactions, litigation, business intricacies, and estate planning. With a proven record of success, our portfolio is adorned with numerous landmark cases that stand as a testament to our dedication, expertise, and commitment to achieving favorable outcomes for our clients.