Buying and Selling a Chiropractic Practice

Considerations in Buying or Selling a Chiropractic Practice

Chiropractors considering the sale or purchase of a chiropractic practice have the option of structuring the sale as either an asset sale, in which the buyer is only purchasing the assets of the existing chiropractic practice, or the sale of the entire professional service corporation, which also includes specified assets. If a buyer is only interested in purchasing the assets of a current chiropractor’s practice, an asset sale defined through either a purchase and sale agreement or a asset transfer agreement can allow the buyer to acquire only the desired assets of the selling chiropractor’s business, including patient lists and databases, intellectual property, information technology infrastructure, and furniture, equipment, and supplies. In contrast, a stock purchase agreement is the agreement most commonly utilized in the sale of an entire legal entity, which in the case of most chiropractic offices is a professional service corporation. In the event of either type of sale, the assets of the existing practice that are to be included as part of the purchase will need to be expressly included or excluded on an asset list, which will be attached to any sale agreement documenting and formalizing the transaction.

One critical element that may or may not be included in the sale agreement’s asset list but needs to be addressed in some section of the sale agreement is whether or not the buyer will continue to occupy and treat patients in the office space currently used by the chiropractic practice. If the selling chiropractor owns the office space used by the practice, it can be included as an asset on the asset list or the seller can agree to lease the space to the buyer at a predefined monthly rate and term. However, if the seller or his or her professional service corporation does not own the practice’s existing location and the buyer requires continued use of the space because he or she feels the practice’s location is essential to its continued success, the sale of the corporation or its assets may need to be contingent on the buyer’s ability to continue utilizing the practice’s current location. Arranging for the practice to maintain its existing location can usually be accomplished by jointly contacting the landlord leasing the office space to the seller and offering for the buyer either to take over the seller’s current lease via assignment or to sign an entirely new lease agreement.

Once all of the details of the sale and its structure have been properly defined, all involved parties must agree on a purchase price and how that purchase price will be paid to the seller. Both of these items will be included in any purchase and sale agreement. Though payment usually occurs either through a lump sum payout at closing or via monthly, quarterly, or annual payments over a set term, it is common in the sale of a professional chiropractic practice for the sale to be structured as a type of loan issued by the seller, complete with a negotiated interest rate and term. In this context, the loan is secured by the practice itself, so that if the buyer defaults at any point during the term of the loan, the seller can regain his or her ownership of the practice. Many chiropractors and other professionals favor this kind of structure because it allows a buyer to spread the purchase price out over time, which can prove beneficial in the early stages of owning and managing a practice, and provides the seller with additional, streamlined protections against a buyer’s potential default.

Contact Our Office For A Consultation

If you are a chiropractor or other professional considering selling or buying an existing practice, Your Contract Lawyer can help you assess what type of sale will most benefit you and your business. Please contact us to schedule a free consultation by calling our office at 310.623.7665 or submitting a contact request through this site.

REQUEST CONSULTATION