By Erica Pero
As we look forward to a new year, you might be thinking about growing your business by purchasing another practice. While every “deal” is different, here are a few lessons I’ve learned along the way that will help maximize your purchasing power and reduce headaches:
1 Figure out your financing first. There’s nothing worse than signing a Letter of Intent, directing your attorney to draft an Asset Purchase Agreement, and then completely changing the financing terms. This will not only delay closing the deal but could potentially lead to additional legal fees and a few headaches. Talk to your bank before signing the Letter of Intent. While numbers and finance might not be your thing, having a painful conversation with your lender at the outset is much easier than deciding mid-process to obtain a loan rather than plunking down a large wad of cash.
2 Get your documentation in order. I’m not talking about EBIDTA (which is also important); rather I’m referring to organizational documents such as your Operating Agreement or Bylaws, corporate meeting minutes from annual meetings, EIN documents, etc. Have this information saved in an easily readable format such as a pdf file. Lenders will want a copy of these documents and the faster you can provide them, the faster you can close the deal.
3 Make time in your schedule to answer questions. You’ve hired an excellent team to handle the deal: your CPA gave you the green light, the lender is someone you trust, and your attorney knows what she’s doing, so you shouldn’t have to lift a finger, right? Um, your team will make the transaction as painless as possible, but they’ll have questions. Schedule a few minutes into your day to field emails, texts, or phone calls. The right team will be very efficient and able to work with your schedule, but buying a practice will take some effort from you, too.
4 Don’t get frustrated when things don’t go as expected. The right team will make the process as smooth as possible, but there will be hiccups along the way. The lease ran out a year ago and the landlord is planning to convert the strip mall into a Walmart Neighborhood Market next year? Someone forgot to file the paperwork for hazardous waste disposal in 2013? “Stuff” happens. Remember to take a deep breath and know that there’s always “something” that comes up. It’s going to be okay.
5 Don’t forget about what comes next. After the deal closes, you have a shiny new practice – but then what? Most providers have an idea in their minds about how they’ll staff the location and run the practice. Talk to your acquisition team about what you’ll need to properly employ additional professionals. Things like payroll, billing, advertising, back-office management, leasing, and staffing are easy landmines for the unaware. Planning ahead is the easiest way to ensure strategic and compliant growth.
Erica Pero, an attorney with Pero Law, focuses her practice on health law. She helps healthcare professionals navigate the complexities of running a business in today’s healthcare industry. Pero Law is a lean law firm committed to excellent customer service and exceptional legal representation. perolaw.com
