We have acted in a number of dental, pharmacy, vetinerary, nursery and other such healthcare business sales. Whilst every sale is different, there are some common issues which can arise.
Property
If you own the property you operate the business from you need to decide if you are going to sell it as part of the business or keep it and lease it to the new owners of your business. Leasing provides the added value of retaining an investment in the long term, not to mention a rental income, which many sellers find attractive. Robust negotiations on the lease terms are important at this stage to ensure in the longer term the property with a tenant in place can be sold and this is where our expertise in negotiating leases comes into play.
Prospective purchasers of the business may also view a lease of the property as an appealing prospect, particularly if funding for acquiring the business and the ownership of the property is proving difficult. New owners may even agree to lease for a period and then buy the property at a later date. Whilst not necessarily an unattractive idea for a seller, advice needs to be taken on the terms of any future option to ensure the open market value for the property is still obtained and that important tax breaks are not lost.
Tax
Early engagement with accountants is essential to ensure advice is obtained on the tax position of any sale of the business. In our experience sellers frequently qualify for entrepreneurial relief which reduces the Capital Gains Tax of certain disposals of business assets. We work closely with clients accountants to ensure the structure of the deal allows for such reliefs to be claimed.
The sale of pharmaceutical products have particular rules in relation to Value Added Tax Liability and many services are exempt. However this does not mean that the sale of business and property may not attract any VAT, so again liaising with your accountant at an early stage ensures this is correctly dealt with.
Goodwill
Goodwill is essentially the value of the business which, in the healthcare sector, is the driver for agreeing a price. Advice from valuers experienced in the sector should always be sought and we work closely with several firms who can assist.
Restrictive covenants
A well-advised purchaser will usually insist on limiting the outgoing owner’s ability to start up a new company or be involved in a competitor business within the local area. The sale contract will deal with restrictions on the outgoing owner, and our employment team provide bespoke advice on what is a reasonable and ultimately enforceable restriction.
Employees
An area of key importance in many business transfers are employment matters. We are often consulted by purchasers seeking to ensure the continued services of staff and looking for advice on how to implement efficiencies in the business or to adjust terms of employment. Sellers frequently seek help and advice on the required consultation process, and on occasion in relation to their own future employment in the business after it has been sold, where for instance they will continue to work as an associate of the business or in an earn-out situation.
Unusual employment scenarios can arise during the sale process which is why specialist advice is important. In the sale of a vet practice, our employment team noted that several people volunteered to assist at the business due to their love of animals. Legally these people had gained the status of employees, with the result that minimum wage regulations were being breached.
If you would like more advice on selling your healthcare business, our team would be happy to help you.
