Pierce & Mandell, P.C.

11 Beacon Street, Suite 800
Boston, Massachusetts 02108-3002

Phone: (617) 720-2444
Fax: (617) 720-3693

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Practice Transitions - Process and Substance

Monday, January 22, 2018
Pierce & William Mandell

When buyers and seller of dental, medical and other professional practices begin to think about practice sales, associate buy-ins, mergers or other major acquisition events, most of the focus is on the substantive terms. What is the value of the practice? What is being purchased and sold and what is the purchase price? How will the deal be structured and what are the tax consequences? Will there be major conditions involving financing, lease assignments or building or condo acquisition or purchase rights? What about any post-closing seller service commitments and/or restrictive covenants?

All such substantive terms are essential to practice transitions. But what should be given as much thought and consideration is the process of the transaction as well. How will the parties communicate? Who else will be involved and when and how will they be deployed? What are the steps and what is the sequencing of taking those steps?

If any step of the process is missing or rushed it can often lead to unnecessary delays, additional costs and even a break-down of the anticipated transaction.

The most important first step of the process for both buyer and seller is to identify the professionals needed and to line them up as early as possible. Buying or selling a professional practice is a major life cycle event for the solo or small practice owner. It is important to understand where you will need professional help and guidance and seek it out early so that you have advisors who exclusively represent your interests, who have specific experience with health and dental professionals, as the deal is forming to provide insight and guidance.

No transaction is like any other and a variety of different advisors may be needed during the process. Some sellers and buyers need transition consultants/brokers to find the right transaction counterpart. All buyers and sellers, no matter how large or small, need their own legal counsel and CPA/tax and financial advisor who are not conflicted and can give their client independent advice. Lender financed practice and/or real estate acquisitions warrant an early role for bank representatives. Other professionals that can play a crucial role in certain deals include insurance advisors, practice managers and technology experts.

There are different phases to every transaction but almost all practice transitions have three major phases: establishing the essential terms; drafting and negotiating binding legal documents; and, consummating the transaction or “closing”.

During the initial phase of establishing the essential terms, it is highly productive to first work on a simple initial written description of the material terms. This type of document can be called an offer letter, a memorandum of understanding or “MOU”, a letter of intent or “LOI” or term sheet, among other names. They are all basically the same thing: a short but comprehensive written recitation of the essential terms of the transaction. Having such a preliminary term document is very helpful and desirable. But, having your advisors in place at the start of the preliminary negotiations is vital, as these documents can be non-binding, binding or even both at the same time. It all depends on the language used in the document. Such a critical part of the transaction should not be pursued, and such a document should not be signed, without prior legal and financial/tax review. Buyers and sellers who wait until it is time to work on the actual legal agreements to retain their advisors often find out some important material terms were not addressed effectively leading to regrettable consequences.

After the initial negotiations lead to a preliminary transaction written summary, the parties will generally set forth a scheduled time frame to complete due diligence, negotiate and enter into formal binding legal agreements, satisfy closing conditions and close the transaction.

Due diligence involves the investigation and review of the financial, regulatory and liability facts of the other party. Financial review can begin even before the initial term sheet is created. Prior to any disclosure of financial and proprietary information to the other party it is customary and advisable to enter into a confidentiality or non-disclosure agreement, to protect the disclosing party and its information from improper re-disclosure and often to keep the existence of the negotiations themselves confidential. Many confidentiality agreements or “NDAs” are presented with hidden binding clauses, such as a “no shop” clause that prohibits a seller from talking to other parties about a practice sale, or a clause that may prematurely bind a buyer to a purchase. So legal review of any NDA or confidentiality agreement for all parties is very important.

Ultimately, every transaction will require binding agreements between buyer and seller setting out all of the terms and conditions of the transaction. Depending upon the nature of the sale these may include purchase agreements for assets, equity, goodwill and real estate. The main purchase agreements (often referred to as the “P&S”) should cover all aspects of the transaction: how the purchase price is to be allocated, if it is an asset or stock/equity purchase, what happens to names and phone numbers, the conditions of closing, including financing, and office leases, post-closing covenants, such as employment and non-compete of the seller, patient letters and practice management.

The P & S will generally include many other vital and binding agreements that will be negotiated at the same time as the P & S but will not be executed and become effective until the closing date. These can include, documents of transfer, patient record custody agreements, restrictive covenant agreements, assumption of leases and contracts, and new partnership agreements if there will be two or more owners going forward.

The final phase -- from execution of the binding purchase agreements to the closing -- will involve satisfaction of closing conditions, often involving third parties (e.g. lenders for financing; landlords for new or assigned leases; payers for credentialing; government agencies for regulatory approval in sales involving licensed facilities; and creditors for payoffs and release of liens).

Needless to say planning for the process of a practice transaction is as important as the substantive terms.

For assistance with the sale or purchase of professional practices, including dental and medical practices, William Mandell, Esq. can be contacted at bill@piercemandell.com, or 617-720-2444.

Pierce & Mandell, P.C. at Yankee Dental Congress 2018

Wednesday, January 17, 2018

For the ninth consecutive year, Pierce & Mandell, P.C. is proud to be part of the Yankee Dental Congress, January 25th through January 27th at the Boston Convention & Exhibition Center.

Yankee Dental Congress is an educational program and convention that draws thousands of dental professionals each year. Pierce & Mandell attorneys who focus on representing dental professionals and practices with dental practice transitions and sales, associate buy-ins, leases, employment and service agreements, and staff employment issues will be at our booth (814) on the Exhibit Hall.

Pierce & Mandell Health and Dental Law Practice Area leader, Bill Mandell will be featured at two educational programs at this year’s Yankee Dental Congress. On Thursday, January 25, from 2 to 4 pm, he will be presenting “Legal Issues in Practice Transitions”.

On Friday, January 26, form 10 am to 12 noon, Bill will be a panelist on “Taking the Fear Out of Buying or Selling a Practice: Ask the Experts”.

If you are planning on attending Yankee Dental come by our booth and say hello.

Click here for more information on the 2018 Yankee Dental Congress. For more information on our services for dental practices contact Pierce & Mandell, P.C. or email Bill Mandell at bill@piercemandell.com.

Bill Mandell was Quoted in the April 2017 Emergency Department Legal Letter Article

Thursday, April 06, 2017

Pierce & Mandell, Curtis DoolingBill Mandell was quoted in the April 2017 Emergency Department Legal Letter article on visitors and guns in hospital emergency departments and suggested a useful policies for hospitals to consider.

Bill Mandell: Faculty at the MCLE Annual Massachusetts Health and Hospital Law Conference 12 years in a Row

Tuesday, December 06, 2016

Pierce & Mandell, PC, Bill Mandell, Boston, MAFor the 12th year in a row Pierce & Mandell, P.C.’s Bill Mandell, was a faculty member at the MCLE Annual Massachusetts Health and Hospital Law, 2-day conference on November 21 and 22, 2016.  Bill co-presented the panel on the law of physicians. He is also a co-author of the related MCLE publication, the Massachusetts Health and Hospital Law Manual. Bill just finished working on an update to the Chapter on Physicians and it will be published sometime next year when MCLE issues the 2017 edition of the Massachusetts Health and Hospital Law Manual. For more information about this publication, click here.

Mass HIway likely to see changes in the near future

Thursday, December 01, 2016

By Karen Rabinovici

The state-sponsored Health Information Exchange, known as the Mass HIway, was launched in October 2012, offering doctors’ offices, hospitals, laboratories, pharmacies, skilled nursing facilities, and other healthcare organizations a method by which to securely exchange information electronically with each other.  The aim of the Mass Hiway was to improve care coordination and delivery, avoid readmissions and medical errors, reduce administrative costs and duplicative testing, enhance communication among providers, increase patient engagement, and improve public health reporting and analytics.  One of the Mass HIway’s main functions is secure direct messaging between participating users, and the Mass HIway plans on soon offering “Event Notification Services,” which will allow for the transmission of notifications to a patient’s health care providers when the patient is admitted to any participating hospital in the state.  All providers, regardless of affiliation, location, or differences in technology, may use the Mass HIway.

The Mass HIway is now likely looking at some changes in the near future.  On Friday November 4, 2016 the Executive Office of Health and Information Services released proposed regulations specific to the requirement for all providers to implement a fully interoperable (meaning, having the ability to send and receive HIway direct messages) electronic health record that connects to the Mass HIway, and the establishment of a mechanism that allows patients to opt-in or opt-out of the MassHIway.  The proposed regulations require specific providers (acute care hospitals, medical ambulatory practices with ten or more licensed providers participating in health care delivery, and all community health centers) to connect to the MassHIway between 2017 and 2019, while other types of providers (behavioral health entities, dental clinics, nursing homes) will be required to connect at a date to be specified, with at least one-year notice (and no earlier than January 2018).  Connection requirements will be established through future regulations.  The proposed regulations would require that providers that are required to connect to demonstrate compliance by attesting to implementing at least one “Use Case of HIway Direct Messaging.”  Examples of this are a hospital using the Mass HIway to send discharge summaries to a receiving facility, or a primary care physician practice using the Mass HIway to send referrals.  The proposed regulations require acute care hospitals to send Admission, Discharge, and Transfer messages using the Mass HIway.

Regarding the opt-in or opt-out mechanism, the proposed regulations will require that a provider must provide written notice to patients that it will use the Mass HIway, and must include in this written notice instructions in the event the patient chooses to opt-out.  Thereafter, either the provider will inform Mass HIway of the patient’s decision to opt-out, or will provide the patient with instructions on how to do so.

A public hearing was held by the EOHHS on Monday November 28, 2016, and public comments were accepted until Tuesday November 29, 2016. Additionally, the EOHHS accepted electronic written testimony.

The proposed regulation can found here.

Bill Mandell Revisits the Need for Clarity under Massachusetts Law for Permitted Health Provider Disclosure to Protect Public Safety

Friday, June 17, 2016

by Bill Mandell

In the wake of yet another senseless mass killing tragedy I am posting an article I wrote in 2013 for the Boston Bar Association Health Law Reporter on the need for a new law in Massachusetts allowing health care providers to report dangerous persons or situations. Click here to read the article.

Pierce & Mandell Sponsor St. Camillus Health Center Golf Tournament

Tuesday, May 31, 2016

Pierce & Mandell was  a proud sponsor of the third annual St. Camillus Health Center golf tournament held at Blissful Meadows Country Club in Uxbridge on May 24.  The tournament raised thousands of dollars for St. Camillus, a non-profit facility located in Whitinsville that provides rehabilitation, skilled nursing and short and long term care to the poor, sick and elderly.  Pierce & Mandell lawyers Robert Kirby, Bill Mandell, Michael Fee and Scott Zanolli braved challenging weather conditions in support of this very worthy charitable endeavor.

Bill Mandell will be Boston Bar Association Featured Panelist

Wednesday, April 13, 2016

Health Law Practice leader, Bill Mandell, will be a featured panelist on April 28, 2016 at the Boston Bar Association’s seminar entitled: “New DOI Guidance on Direct Primary Care Practices in Massachusetts.”

Pierce & Mandell Participated in Yankee Dental Congress 2016

Tuesday, February 02, 2016

For the seventh consecutive year, Pierce & Mandell, P.C. was proud to be part of the Yankee Dental Congress, held January 28th through January 30th at the Boston Convention & Exhibition Center.

Yankee Dental Congress is a trade show and convention that draws thousands of dental professionals each year.  Pierce & Mandell attorneys William M. Mandell, Michael C. Fee, Hannah Schindler Spinelli and Karen Rabinovici met with dental professionals who were interested in legal advice on all dental law and ethics, including dental practice transitions and sales, associate buy-ins, leases, employment and service agreements, and staff employment issues.

Click here for more information on Yankee Dental Congress. For more information on Dental Law contact Pierce & Mandell, P.C.

Bill Mandell Will be a Featured Panelist at the Boston Bar Association Seminar

Thursday, December 24, 2015

Health Law Practice leader, Bill Mandell, will be a featured panelist on Thursday, January 7, 2016 at the Boston Bar Association’s seminar entitled “Accountable Care Organizations: How They Work, Do They Work?”

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