Buying A Practice? Follow These Guidelines To Avoid Legal Pitfalls

The purchase of any type of professional business, be it a medical, dental, or other healthcare related practice, is fraught with legal issues that require the skill and expertise of experienced attorneys. There are often numerous governmental and regulatory filings required when a professional business is sold. While you should always speak to a licensed attorney before purchasing any type of business, this article will address some general considerations regarding the purchase of a professional business.

Understanding the Type of Transaction

The purchase of a business takes one of two main forms: an asset purchase or a stock purchase. An asset purchase allows a buyer to pick and choose the specific assets of a business that will be purchased while not generally assuming the debts and liabilities of the business. A stock purchase involves a buyer purchasing all of the stock of a business and assuming the entire business, including all assets, debts, and liabilities.

What Should I Do Before Purchasing a Professional Business?

It is important for a buyer to know what to do before purchasing a business in order to prevent possible legal issues like litigation. The buyer should obtain as much information about the business as possible before purchasing the business. Potential buyers should gather paperwork, research the business and its owners, and take care of any regulatory issues before the sale is finalized. No matter the type of business you are purchasing, it is important to understand the following before purchasing a professional business:

1. Collect and Save Important Documents

You should collect and preserve any and all relevant documents relating to the purchase of a professional business. During the course of the transaction, you will likely enter into a number of documents, including, but not limited to, a letter of intent and a purchase agreement. Before signing any documents, it is important to have an attorney review them.

2. Communicate with Seller Before Purchasing the Business

It’s important to learn about the business before purchasing it. Buyers typically learn about a seller’s business through the process of due diligence. The due diligence process helps the buyer learn important aspects about a seller’s business including if the business has any tax issues, the financial status of the business, and the regulatory and governmental filings needed to be completed. Additionally, the buyer and seller will have to work through what the terms of the deal will be, including the purchase price and the closing date of the transaction.

3. Work Closely with Your Attorney

The purchase of a professional business can be complex due to the number of regulatory and governmental filings that may be required. In order to ensure that all the required filings are met, it is important to reach out to an attorney as soon as possible during the transaction. Further, an attorney experienced in the buying and selling of professional businesses can help the transaction progress as smoothly as possible.

Do you need the assistance of an attorney?

The process of buying a professional practice can be overwhelming and time-consuming. If you are not experienced, you could leave yourself and your business open to litigation. Hiring an attorney can help you purchase a business legally and efficiently. If you need legal guidance from experienced attorneys, contact the Finance and Corporate team at Brown and Fortunato, P.C. today. You can call us at (833) 228-6300 or Contact Us via email for more information about our Practice Areas.