Purchase and Sale of a Professional Practice

The following article and those dealing with this topic were originally written by myself and Ernest Wolkin, C.A. http://wolkin.ca/ and appeared in Canadian Chiropractor http://www.canadianchiropractor.ca/ . This topic will be presented in a number of postings.

PURCHASE / SALE OF A CHIROPRACTIC PRACTICE

Allan Freedman, LL.B.
Ernie Wolkin, C.A.


A.F. As the chiropractic profession continues to progress through its second 100 years of history, a natural result will be the increasing number of chiropractic practices that will be transferred from one doctor to another doctor through a voluntary or involuntary financial transaction. With respect to the matter of the voluntary transfer of a chiropractic practice, the customary transaction involves the purchase/sale based upon a willing purchaser acquiring the practice from a willing seller based upon fair market value. An involuntary sale might include either a disposition by a trustee in bankruptcy or an estate on behalf of a deceased practitioner.

Through a series of articles, we will be reviewing the various issues involved in the sale and purchase of a chiropractic practice, including the terms, conditions, warranties, representations, searches and valuations involved in dealing with a sale and purchase. There are different considerations involved in the various transactions depending on which Aside of the fence@ the practitioner finds him or herself. Just as important is the fact that there are a number of different parties who may be involved in the transaction, namely, the vendor, purchaser, their spouses, lawyers, accountants, real estate agents, appraisers, bankers, and landlords. It is the intent of the authors to acquaint the reader with an understanding of the issues involved in the transactions in order that the doctor will be in a position to meet the challenge of acquiring or disposing of a chiropractic practice in a professional manner in order to achieve not only the highest financial gain but to ensure that there is an orderly transfer of the practice to ensure that interests of the patients are maintained as being the most important factor in the transaction.

We have approached this topic in a novel fashion. The various topics which will be discussed in the series of articles will be commented upon within both the legal context and accounting context. The reader may well find that the comments of the two authors may not always be in agreement. In some cases, the important considerations relating to matters of finance may not necessarily be the same considerations relating to those of a legal nature. In other cases, the information presented by the authors may seem completely redundant. In any event, in those instances where the author is Allan Freedman, LL.B., the initials "AF" will be used. In those instances where the author is Ernest Wolkin, C.A., the initials "EW" will be used.

It should always be kept in mind that it is always left to the purchaser and/or seller to ascertain what might be in his or her best interests. For the most part, what we are about to endeavour upon is novel in approach and fraught with risk. Hopefully, when the series of articles has been completed, the reader will be better educated and in a position to deal with the contingencies of a sale or purchase of the practice. After all, we are all, at some time, going to be leaving professional practice in the 21st Century!