The process of a dental practice transition involves several different contracts. Typically, after the practice owner has selected a potential buyer, that buyer will want to obtain financial or operational information about the practice.
Before providing a buyer with confidential practice information, it is crucial that the practice owner have the potential buyer execute a non-disclosure agreement. By executing a non-disclosure agreement, the buyer is required to keep the seller’s practice information confidential.
Next, a Letter of Intent should be drafted. This is a document that generally outlines the overall structure of the sale, and also outlines specific terms of the sale, as well as establishes the parameters on which the final contract will be prepared. Typically, the practice owner’s attorney prepares this document with the practice owner’s guidance, and it is then submitted to the potential buyer for review and negotiation.
After the Letter of Intent has been agreed to by all of the parties, a formal contract will be drafted. The final contract is based upon the terms of the Letter of Intent. However, the final contract [Asset Purchase Agreement] will be much more detailed and expansive in nature. This process usually involves negotiations between the parties, and can at times be time consuming. After the requisite contracts have been agreed to by all of the parties, the final document will be executed, and the buyer will then transition to an owner of the practice.