The 9 Biggest Legal Mistakes Physicians Make When Selling a Healthcare Practice

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At some point during their career, many physicians will face the prospect of selling their medical practice. Whether the result of a voluntary decision (such as a well-earned retirement) or a less happy situation (such as illness, divorce, disability), the sale of a medical practice needs to be structured to best realize the selling physician’s two main goals: maximum profit and minimum post-sale liabilities.

The following are mistakes to avoid when selling a healthcare practice:

Mistake 1        Agreeing on Price Before Consulting a Valuation Expert

Mistake 2        Agreeing on Terms and Conditions Before Consulting an Attorney

Mistake 3        Making Representations and Warranties That Cannot Be Supported

Mistake 4        Failing to Require Certain Representations and Warranties From the Buyer

Mistake 5        Not Reviewing the Assignability of Key Third-Party Contracts

Mistake 6        Getting Inadequate Security for Seller Financing

Mistake 7        Agreeing to an Unrestricted Noncompetition Clause

Mistake 8        Agreeing to Buyer-Controlled “Holdbacks” From the Purchase Price

Mistake 9        Not Including Termination Provisions in the Agreement

Physician owners can avoid many of these potential mistakes with guidance from an experienced healthcare business broker and transactional attorney, proving that, in a business transition as well as in medicine, an ounce of prevention is worth a pound of cure.

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