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Process for Exchange of Contracts

Posted by practicesales on April 22, 2016
| 0

Congratulations! You have done your due diligence and you have negotiated a mutually agreed upon purchase price. Now what? We are asked this so often, we thought we’d put up an article detailing the process.

  • Step One – Letter of Offer
    We draw up a “Letter of Offer” detailing the following items:

    1. Contact details of both vendor and purchaser
    2. Agreed Purchase Price
    3. Conditional items (examples below)
      1. Restraint of trade clause
      2. Pending finance
    4. Proposed Settlement date.

Purchaser reviews the details, signs the document, scans and emails back to Healthcare Practice Sales.

  • Step Two – Drawing up of Contracts:
    We forward the document to the Vendor who also signs the document and sends it back to us. The Vendor also forwards the Letter of Offer to their solicitor so they can begin drawing up the contracts. This can take a couple of weeks. The Purchaser should give their Solicitor notice, that he/she should expect the contract in due course.
    Note: the terms of the handover agreement should also be included in the contract:

    1. Terms, hours, pay etc.
    2. Transferring of patient records
  • Step Three – Finance
    Finance needs to be arranged. Purchaser will be required to pay a 10% deposit on exchange of contracts, and the balance upon settlement unless another payment plan is agreed to. The Purchase should ensure all your documents are in order so there are no delays.
  • Step Four – Exchange
    Contracts are exchanged and a 10% deposit is paid into the Vendor’s Solicitor’s trust account.

Things to consider leading up to Settlement

The following is different for every practice, so we have listed some things to consider if relevant.

  1. Arrange transfer of HICAPS to Purchaser name. Vendor needs to fill out a “Change of Ownership/Legal Structure HICAPS form. The form is available here:

https://www.hicaps.com.au/content/dam/hicaps/Forms/NBU6914_297x210_Change_of_Ownership_Form.pdf

  1. Transfer of Electricity, Phones, Internet provider, Website domain name needs to be organised.
  2. Arrange for a provider number
  3. Contracts for staff, entitlements etc..
  4. Transfer of Lease Agreement
  5. Stocktake at settlement
  6. Handover Period – what to expect
    • Purchaser should be introduced to all employees
    • Purchaser should be introduced to all patients, and suppliers
    • Procedures should be explained
    • Handover of all keys, alarm codes and security devices
    • Notifying insurers, Australia Post, industry associations.

It’s often a good idea to set up a meeting between the vendor and purchaser to discuss all of the items above.

Immediately after Settlement

  • Lodge applications for transfer of registration of business name. See ASIC Connect.
  • Transfer all necessary permits, licences, registrations and certificates (if relevant)

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