Are you a dentist or do you work with dentists? If so, welcome to the second entry in the limited series: “Mike’s Molars: General thoughts pertaining to the dental professional practice owner or aspiring dental professional practice owner”.
While serving as the legal and business advisory team to assist and support dentists who are either buying or selling a dental practice, we typically work on a transaction we refer to as an “Asset Sale” or “Asset Purchase”.
This is distinguishable from a “Stock Purchase” or a “Stock Sale” in a variety of ways, but two primary distinctions are:
(i) In an asset deal, the buyer forms a new company and acquires certain defined “assets” from the seller’s existing company including, tangible assets like furniture, fixtures, equipment and inventory as well as intangible assets like phone numbers, domain names and goodwill; and
(ii) An asset sale allows the buyer and seller to exclude certain assets and ALL liabilities of the seller unless those liabilities are specifically assigned and assumed—for example, a commercial lease for the premises of the practice is something we usually have assigned by the seller and assumed by the buyer.
One of the most frequent questions I get about “excluded assets” is whether a selling dentist can keep (i.e., exclude from the sale/practice transition) specific pieces of artwork, diplomas and/or other personal property that may have sentimental value.
First, I’m here to tell you— I totally understand. If you know me personally, you probably know that I’m a big music fan, with particular emphasis on the Dave Matthews Band. As a part of the music “fandom”, I’ve become a collector of concert posters over the years and they mean a great deal to me—in fact, my wife Erica Burger, aPHR and I even have a podcast called “Posters In Every Direction” dedicated to our review of concert posters and the artists who design them (shameless plug incoming–you can find the Posters In Every Direction podcast on Spotify or Apple or wherever you listen to your podcasts). If I were involved in selling my business, I’d want to be assured that my posters remain with me!
Secondly, I’m here to tell you—yes, almost always, we can help negotiate the transaction and prepare the relevant documents so that these types of personal assets (i.e., pictures, paintings, artwork, etc.,) are appropriately designated as “excluded assets” and therefore, are not included in the transition/sale of the dental practice and that these excluded assets remain the property of the seller (or the principal of the seller).
The key take away here for the dentist thinking of selling their dental practice is this: Don’t worry, be happy—we can help you retain your artwork, diplomas and personal items and still have a successful sale of your dental practice!