If you decide to quit the practice of chiropractic but you don’t want to just shut your doors and walk away, you should consider selling the practice. If you opt to sell your practice there are two distinct ways to do so. One way, if you are incorporated or operate as a formal business entity such as an LLC or a PA, is to simply sell the stock in your business entity to a willing buyer.
Since your business entity owns the assets of your practice by selling the stock in your business entity you are automatically selling the assets of your practice. However, a buyer who purchases the stock in your business entity will acquire not only your assets but also any existing liabilities that may arise prior to the expiration of our state’s statute of limitation. For example, any debts owed by the business entity, itself, would transfer to the new buyer. The same with any latent professional liability issues. So, in this scenario it is always Buyer Beware.
Most sales of chiropractic practices are actually the sale of only the chiropractic assets owned by the Seller (either the individual doctor or the doctor’s formal business entity). The assets of a chiropractic practice generally include all of the goodwill, medical records, patient files, supplies, business name, xrays, telephone numbers, marketing listings, contracts, domain names, internet web sites and other tangible and intangible assets owned by Seller. The medical records that are to be sold generally include all patient charts and records, contract records, personnel records, accounting records and such other records as a buyers may reasonably require to continue to operate the chiropractic practice operated by the seller, as well as all of the seller’s rights and interests in and to all sales data and records, patient lists, catalogs, brochures, supplier’s names, mailing lists and advertising materials associated with such medical records. A practice’s “goodwill” generally means all the trade, business and other intangible assets owned by Seller, including the buyer’s right and authority to utilize the name of seller’s practice, including the right to use all signs, internet domain names, internet web sites, telephone listings and marketing campaigns maintained by seller at the location of seller’s business.
All furnishings, fixtures and equipment to be sold are generally sold in an “as is” condition. Thus, it is paramount that the seller enable the buyer to see and become aware of the existing working condition and merchantability of all such furniture, fixtures and equipment to be sold.
One very important “asset” if the outstanding accounts receivable owed the seller as of the date of closing. When a seller seeks to sell the existing “A/R” it is very important to allow the buyer to inspect the books and collection rates, as well as the most frequent billing codes utilized so as to avoid any contention on the part of the buyer that the collectability of the existing aged “A/R” was overstated. Any assets that are to be excluded from the asset sale must be specifically described in detail and should be clearly marked so as to avoid any contention by the buyer that he/she was misled.
The purchase-sale agreement should clearly specific the closing date and each respective parties’ obligations. The terms of the purchase price must be clearly described and all financing documents such as promissory notes, security agreements, etc. should be incorporated and made a part of the purchase sale agreement.
If the buyer seeks to have a noncompete provision incorporated into the agreement whereby the seller would agree not to reopen a chiropractic practice within a specified location for a specified duration the terms of the restrictive covenant must be clearly defined and the restrictions imposed must be reasonable as to time and location or they may not be enforced by the courts.
Both the buyer and seller must be aware that they will be required to notify the Texas Board of Chiropractic Examiners within 30 days of their sale and acquisition of the chiropractic practice and the buyer must register the facility under the buyer’s name within that 30 day time period. If the seller plans on moving and opening a new practice the same 30 time frame would apply.
Follow the above rules of thumb and you should not have any troubles in buying or selling a chiropractic practice.