November 12, 2021
When it comes to buying a dental practice, everyone usually wants the deal to close as quickly as possible, whether you’re the seller or the buyer. A common phrase said in business circles is time kills deals. Something that is often overlooked, in dentistry and beyond, is putting together a proper purchase and sales agreement. After all the initial steps of negotiating, many buyers and sellers simply don’t have the will to construct and parse out another complicated document, especially right at the end of a deal. But, in reality, it is one of the most important protections you as a buyer can utilize.
How a Purchase & Sales Agreement Protects You
In essence, a purchase and sales agreement is designed to keep you and the seller safe financially and legally once the practice has been bought. For the buyer, a standard one will include provisions like:
This prevents the seller from opening up a competing business in the same area after a dental practice has been purchased. The last thing a buyer wants is for the existing patient base to disappear because the former dentist is now operating down the road.
This prevents the seller from taking (or “poaching”) the team members or patients at the purchased practice. This way, you as the buyer have the choice to keep or let go of your inherited team members, plus you’ll have a healthy patient base right from the start.
If the practice is the subject of litigation, is currently in arbitration, or is found to have broken the law in any way, this agreement prevents you from being held responsible despite being the new owner. Basically, this keeps you from having to deal with a problem you didn’t cause!
Not every piece of knowledge about a business, buyer, or seller needs to be public knowledge, and this agreement outlines what can be shared openly by both parties regarding the practice and the nature of the purchase.
Intellectual Property Agreement
For dental practices, this allows the buyer to use any trademarks or branding associated with the practice if they choose to do so. This can help with the consistency of marketing and make the transition smoother at the beginning. If a buyer wants to change the name, this gives them time to do so.
When to Bring in Experts
A purchase and sales agreement is a legally-binding document, so you should at least work with a lawyer when putting one together. That way, they can make sure the terms are in line with local, state, and federal laws while also guaranteeing you aren’t exposed to liability. If you have a team that is helping you buy the practice, they should also look at it so they can guarantee that it is favorable for you.
When done well, a purchase and sales agreement should allow you to sleep a little easier while buying a dental practice, because when it’s put together correctly, you can know for certain that your business and finances are well protected.
About Next Level Consultants
Next Level Consultants is led by Michael Dinsio, a former banker who has helped close deals for hundreds of dental practices around the country, and Paula Quinn, a practicing dental hygienist, practice owner, and consultant. They and their expert team can help you through each step of the purchasing process, and to learn more about their services, contact us today.