The Practice Manager's Guide to Buying a Practice - McMasters ...

Put simply, it is not possible to receive the best deal, if it is arranged by a subjective broker, whoreceives commissions.McMasters’ offers expert financial planning advice, as well as a specialty loans tailored for doctors.Any commissions McMasters’ receive from outside financiers are reverted back to the clients aroundDecember each year, making it a nice surprise for Christmas. Financing your loan can beincorporated into your tax planning, reducing financial strain and ensuring you can spend more timeconcentrating on medicine.Council zoning permissionsIt might sound obvious; however, it is amazing how often this simple check is overlooked. A failureto check zoning permissions is one of the most common mistakes in a sale of business transaction. Itshould not be assumed that a practice is eligible to run from the premises because one is run fromthere now. Gaining confirmation in writing from both the vendor and the council (or any otherrelevant body) is strongly advised.McMasters’ discovered a situation where a large two story 8 doctor practice had a permit for onlyone practitioner. The sale settlement date was fast approaching. Eventually the situation wasovercome; however, the sale settlement was temporarily in doubt. It could happen again. Check allcouncil zoning rules, and do not assume anything is in order unless you have it in writing.Preparation of the sale of practice agreementIt is conventional for the sale of practice agreement to be prepared by the vendor’s solicitor. Relateddocuments such as a consulting contract, (when the vendor practitioner is staying on for a while aspart of the deal), should also be prepared by the vendor’s solicitor.The purchaser’s solicitor checks the sale of practice agreement and related documents and advisesthe client whether they are in order to sign. If not, advice will be given about what changes areneeded in order for them to be signed. A solicitor should handle these documents. A draft sale ofpractice agreement is included at appendix 2. This gives an idea of what these documents look likeand an understanding of the legal process behind the sale.The solicitor’s role should not be to “do the deal”. This should be done by the practitioners, perhapswith some assistance from accountants or solicitors. The solicitor’s role should be to document thedeal agreed to by the practitioners, and make sure the sale transaction proceeds smoothly inaccordance with the practitioners’ deal. Many examples have been seen of over-zealous solicitorsand other advisors ultimately disrupting the sale process and causing detriment to all concerned.Assumption of responsibility for the vendor's debtsGreat care needs to be taken in this area. Few advisors recommend buying the shares of a privatecompany that carries on a small business such as a medical practice. Not only are the assets of thebusiness being bought, but also the liabilities of the business are purchased. This includes liabilities9