When it comes to writing a sales contract, it's in the best interest of all parties involved to insure that every aspect of the deal is in writing. A verbal agreement leaves room for misinterpretation and disagreement. All details of the sale should be in writing and signed by both parties. This guide will walk you through some of the most important topics to cover in your contract so you won't leave anything to chance.
First and foremost, your sales contract needs to clearly outline what is being sold as "the practice." This includes all of the assets that are involved in the sale and should specify which equipment is staying and going. This will help avoid any chance that either party will change their mind about a specific piece of equipment before closing.
Real Estate Details
Real estate involved in any business sale is one of the more challenging areas of the contract. Whether you lease or own the building you need to be sure that all pertinent real estate information is understood. If a lease is being assumed or sublet, you may need additional documentation from the landlord verifying this agreement.
The sales contract should also specify any details pertaining to how the practice will be purchased. Whether the financing is coming from the seller or from another source, it needs to be laid out in the contract. Any contingencies for equipment payoffs or repairs also need to be written in to ensure the practice meets expectations when the deal closes.
In addition to information about the practice and financing, you will also want addendums and explanations for any staffing agreements that have been made. This is where you will include details about non-compete agreements, or ongoing employment contracts with your veterinarians.
With so many documents being passed around, it seems like there is always one more signature missing from a form. Even a single missing signature can seriously delay an closing. The day before you go to closing you should contact your broker and double check that all paperwork is completed and all signatures are present on the sales contract.
Selling a practice can be stressful, but the more information you put in writing in your sales contract the less confusing the process can be. By writing everything down and getting signatures from all parties you will protect yourself against any misunderstandings on your way to closing and after. While selling your practice also take tax considerations into account.
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