Dental Practice Post-Closing Obligations

two men shaking their hands

The close of the sale of a dental practice doesn’t mean the transaction is at an end. Buyers and sellers of dental practices have post-closing obligations to each other and the dental practice. For example, the buyer may retain patients, and the seller may not be ready to retire. Working with an experienced dental attorney can help you protect your interests during the post-closing period.

Reach Out to a Post-Closing Attorney for Dental Practices

The dental attorneys at Mahan Dental Law provide buyers and sellers with experienced legal advice regarding their post-closing obligations. We will help you understand your legal responsibilities and rights after the sale of the dental practice. We can help you negotiate and draft an effective agreement if you haven’t signed a post-closing agreement. Contact Mahan Dental Law today to schedule a consultation and learn more about how we can protect your case.

The Importance of Post-Closing Agreements

The closing process is a multi-step process that includes signing the letter of intent and conducting due diligence. The process also requires negotiating the terms of the purchase and sales agreement. Once both parties have drafted and signed the sales agreement, the deal is closed, and the post-closing obligations begin. Creating a post-closing agreement can benefit the buyer and seller. 

Work Back Clauses in Post-Closing Agreements

For example, a post-sale agreement can enable the dentist who owned and sold the business to continue to work in the dental practice after the business has been sold. A dental attorney can provide advice about the best type of work-back agreement. Important legal and tax consequences come with hiring the seller as an employee or independent contractor. 

The attorneys at Mahan Dental Law can help you negotiate and draft a post-closing agreement that can provide client protection while providing structure for the relationship between the seller and buyer moving forward. A seller’s work-back arrangement should benefit both parties and the practice. A post-closing agreement can also include clauses allowing the dental practice to retain current clients and disallowing the seller to take clients away with him or her to a new practice.

Important Post-Closing Issues in Dental Practice Sales

Closing the sale of a dental practice is a significant milestone, but issues important post-closing issues can arise that need to be addressed. The closing date is typically the first time the buyer of a dental practice assumes control of the practice. From purchase price adjustments to indemnification clauses, details can come to light that wasn’t discovered during the due diligence process. The attorneys at Mahan Dental Law know how to work toward a seamless transfer effectively. When the new owner takes over, there will be leadership changes, strategic management, and personal changes. Our attorneys can represent you at every step and strategically address post-closing issues quickly so you can continue moving forward. 

Purchase Price Adjustments

Purchase price adjustments can be necessary post-closing, but they are usually relatively minor adjustments. The dental practice buyer may adjust the purchase price based on financial factors or working capital. Generally, the purchase price adjustment can be made through funds held in escrow as long as the buyer doesn’t attempt to raise the purchase price substantially. 

In a one-step adjustment, the buyer and seller agree on the final working capital and purchase price when they close. In a two-step adjustment, the buyer reviews financial information for several days. After the review, they adjusted the sales price a second time. When disputes over purchase price adjustments occur, the attorneys at Mahan Dental Law will help you understand your options and negotiate a fair outcome.

Indemnification Clauses

The goal of indemnification causes is to protect the buyer should the seller engage in a breach of warranties. Also known as “hold harmless” clauses, indemnification clauses create a contractual agreement in which one party agrees to reimburse the other party for losses or damages. 

For example, suppose one dental practice or dentist is purchasing another dental practice. In that case, the sales agreement may include an indemnification clause. The clause may require the seller to provide indemnification for losses that arise post-closing due to a breach of warranties. At Mahan Dental Law, we help dental practice sellers understand their liability regarding the minimum scope and duration of indemnification. We also represent buyers who’ve suffered damages due to a breach of warranties on the seller’s part.

Restrictive Covenants

Many purchase agreements for dental practices include some type of restrictive covenant during the post-closing process. Non-solicitation agreements require the seller to avoid soliciting or “poaching” employees from the dental practice. Non-compete agreements prohibit the seller from opening another dental practice in a specific geographic region for a set time period. The sales agreement may state whether the seller must provide current employees with wages and benefits for a specific period during the post-closing process.  

Resolving Disputes During the Post-Closing Process

Disputes arising during the closing process can happen, but they can be frustrating for both parties. Should a price adjustment or other disagreement lead to conflict, the attorneys at Mahan Dental Law can help you navigate the negotiation process. Disputes don’t need to result in the deal falling through, and when both parties act in good faith, a successful outcome is possible. 

When necessary, the attorneys at Mahan Dental Law use alternative methods other than litigation to resolve disputes, such as negotiation, mediation, and arbitration. While protecting your legal rights and interests, we will simultaneously work with the other party to reach a beneficial agreement. Our trial-ready attorneys are prepared to represent you in court if a resolution cannot be reached.

Discuss Your Case With a Dental Attorney

At Mahan Dental Law, our attorneys work with dental practices nationwide, assisting them in meeting their post-closing obligations. We will help you navigate every step of the dental practice transition as smoothly as possible so you can close the deal and fulfill all of your post-closing obligations. With your best interests at the forefront, we’ll help you understand and meet all of your obligations. Contact Mahan Dental Law today to schedule a consultation.