This is the fifth article of a multi-part series on the process of healthcare transitions prepared by Samuel N. Klewans and Michael Skerritt. This article focuses on selecting healthcare practice professionals, such as a transition attorney, a CPA and a banker.
Select an Experienced Healthcare Practice Transition Attorney, CPA and Banker
Whether you are a potential third-party purchaser, an associate who hopes to purchase an interest in a practice, or the seller of an existing practice, careful selection of a transition attorney, CPA, and/or banker with specific experience in healthcare practice transitions is essential to an efficient, successful transaction.
You may not have an attorney, CPA or banker to assist in your transition, but if you do, they may not be the correct professional to represent you in this type of transaction. For example, you would not go to the dermatologist to have open heart surgery. Yes the dermatologist is a physician and yes the dermatologist may have had a course or basic training in vascular surgery or heart surgery, but the dermatologist does not perform open heart surgery in his or her day-to-day practice.
It is the same with an attorney, CPA or banker. You would not want a general practitioner, a criminal attorney, or a personal injury attorney to assist you in a healthcare practice transition. You would want an experienced transition attorney. Likewise you would not want an auditor or general CPA to assist you in a healthcare practice transition.
Additionally, when selecting a banker it is important to understand that not all bankers are familiar with the nuances of healthcare practice transition financing. As mentioned in Part 4 of this series, banks typically do not loan money using the same criteria as other types of loans because with healthcare practices, they are essentially financing the business’s cash flow.
There are attorneys, CPAs or bankers who concentrate in these specialized areas of law, accounting, and financing and you will want one of these specialists to represent you. In our experience, attorneys, CPAs or bankers who have little or no experience in healthcare practice transitions take indefensible positions and then defend them to the death. Whereas, experienced transitional professionals know what questions to ask, what documents to prepare, what needs to be covered in the documents, what the tax implications are and how to resolve them. They know what the purchaser’s ongoing legal and tax considerations need to be after the transition. This extensive knowledge is invaluable to anyone seeking to purchase or sell a healthcare practice.
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