Oberman Law Firm

OBERMAN LAW FIRM

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Important Considerations in Selling a Dental Practice

The sale of a dental practice for the seller and buyer can be a daunting process. Below is a narrow summary of items that should be considered when selling or buying a dental practice.

1. Letter of Intent (LOI)

Some transactions involve executing a Letter of Intent (LOI) early on to outline key terms before diving into detailed negotiations and the definitive agreement. Although non-binding in most respects, the LOI sets forth the groundwork for exclusivity and confidentiality. Buyers often drive the push for an LOI, leveraging its terms to maintain deal integrity post-execution.

2. Employment Agreement

Buyers, particularly private equity firms, usually require the seller to work in the practice post-sale. Employment terms, including termination clauses and compensation details (such as W-2 pay, benefits, and paid time off), are crucial aspects of a post-sale agreement. Non-compete and confidentiality provisions are often points of contention during negotiations. It should be noted that non-compete agreements will vary from state to state, especially with the proposed FTC ban on non-competes.

3. Asset Purchase Agreement

The Asset Purchase Agreement is pivotal in determining the purchase price, payment terms, and tax implications. It specifies what assets are included, as well as what liabilities (if any) will be assumed by the buyer, and ensures a lien-free asset transfer. Non-compete and non-solicitation clauses are commonly integrated into this agreement.

4. Office Real Estate

Ownership or lease agreements for office space play a critical role. Buyers must review lease terms for assignability, potentially negotiate new a lease or purchase options. Compliance with legal regulations and fair market value assessments are imperative.

5. Equity Retention/Rollover

For a practice sale to a DSO, sellers may retain equity in their existing practice location, or in the DSO as a whole. Evaluating risks and rewards associated with an equity roll-over option is critical.

6. Pragmatic Issues

Adapting to a corporate environment post-sale can be challenging for sellers accustomed to being the only decision-maker. Aligning goals and expectations is vital for a successful transition. Protecting personnel and defining roles within the new organizational structure are also key considerations. Cultural compatibility between parties is crucial for fostering a harmonious post-acquisition relationship.

Engaging a proficient advisory team, including a healthcare attorney, consultant, and accountant, is critical to a successful transition. The expertise of a strategic advisor is instrumental in navigating the legal, financial, and operational complexities of a practice sale.

In summary, selling a dental practice necessitates careful attention to detailed agreements, thorough due diligence, and transparent communication. Success in a transaction hinges upon strategic planning and collaboration to achieve a mutually beneficial outcome for all parties involved.

About Us
Oberman Law Firm represents clients in a wide range of practice areas, including private equity, M&A, healthcare, corporate transactions, intellectual property, data privacy and security, regulatory compliance and governance, cross-border transactions, labor and employment, construction law, litigation, private clients’ services, corporate restructuring, and white-collar and governmental disputes.

As a firm, we offer the highest quality legal advice coupled with extraordinary and tailored service to deliver exceptional results to our clients. Our philosophy is to invest deeply in the brightest legal talent and build dynamic teams that operate at the pinnacle of respective practice areas. We believe in empowering our attorneys, encouraging entrepreneurialism, operating ethically and with integrity, and collaborating to bring the very best to every client engagement. These principles have guided us in building extraordinary and successful long-term partnerships with our clients.

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Stuart J. Oberman is the founder and President of Oberman Law Firm. Mr. Oberman graduated from Urbana University and received his law degree from John Marshall Law School. Mr. Oberman has been practicing law for over 30 years, and before going into private practice, Mr. Oberman was in-house counsel for a Fortune 500 Company. <strong><a href="https://obermanlaw.com/people/stuart-j-oberman/"><span style="color: #0059b8;">Read More =></span></a></strong>

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