Selling a dental practice or restructuring ownership interests can be a complex process. This type of transaction requires the right advice to guide you through the process so you can exit the business smoothly.
Here are 8 points you need to consider when selling your dental practice:
1. THE CONTRACT MUST PROTECT YOUR INTERESTS
Contracts for the sale of a dental practice will involve negotiation of terms between you and the buyer. Contract terms should be tailored to your particular business sale. Consider whether any restraint clause preventing you from competing with the buyer is reasonable.
2. WHAT YOU ARE SELLING MUST BE SPECIFIED
To avoid any disputes prior to settlement, include a list of the equipment which will be sold with the business. Any items or equipment which are not part of the sale must be specifically excluded to protect your entitlement to them. If stock is included in the sale, there should be provisions regarding a fair stocktake procedure. If you use a trademark or business name, you must ensure they are correctly registered.
3. YOU MAY HAVE CONTINUING OBLIGATIONS
The buyer may have post-settlement requirements of you. This could include you attending the practice on a regular basis to assist with the business transition or that you introduce all your patients to the buyer. You should be clear on your obligations and ensure they are not overly onerous on you.
4. REQUIREMENTS OF YOUR LEASE
If you lease the premises where the business is conducted, the lessor is likely to have specific requirements for the lease to be assigned or surrendered. As contracts are often subject to the buyer entering into a lease, it is important that these requirements are known and complied with. If you have paid a bond or provided a bank guarantee, this will need to be returned to you once the business sale has settled.
5. FRANCHISOR CONSENT MAY BE REQUIRED
If your business is a franchise, consent will be required from the franchisor prior to the settlement date. Franchise agreements will need review and consideration given to any transfer fees.
6. YOU WILL HAVE OBLIGATIONS AS AN EMPLOYER
It is important to consider any employment contracts in place with your current employees. Depending on the terms of the business sale contract, you may be responsible for redundancy payments, if any employees choose not to continue with the buyer. If any employees do accept employment from the buyer, you may be required to pay a portion of their accrued leave entitlements.
7. YOU GIVE WARRANTIES IN THE CONTRACT
Standard contract terms include several warranties that you give the buyer, and if any are incorrect, the buyer may have a right to terminate the contract. These include that all plant and equipment will be in working order at settlement and there are no notices or orders in relation to the business from any authorities. Some of these may need to be removed or adapted to suit your particular circumstances.
8. YOU MUST PROVIDE DOCUMENTS AT SETTLEMENT
You will need to organise a range of transfers and releases prior to settlement, which may take time to arrange. These could include releases of registered securities, business name and trade mark transfers, assignments or surrenders of lease and transfers of any vehicles. You should you initiate these processes early to ensure you meet the settlement date deadline.
Lauren Black is an Associate in the Property and Business teams at Plastiras Lawyers. Lauren has a particular interest in helping dentists with the sale and purchase of their dental practices. Lauren also assists clients with property sales and acquisitions, including commercial and residential premises.