Buying or Selling a Physician’s Clinic in Canada

What Health Professionals Should Know

For many Canadian health professionals, owning their own practice has been an ongoing dream since they entered the medical field. Whether you are ready to transition to owning a private medical practice or are preparing to sell a clinic you’ve operated for decades, proper planning can allow you to make the most of your opportunities. Buying or selling a medical practice is a complex, multi-step process with many advantages and potential pitfalls.

MÉDICALOI provides in-depth, personalized legal services that help our clients within the health care professions take their business aspirations to the next level. By combining our detailed knowledge of the medical industry and its practices with our experience in corporate law and acquisitions, we are well-positioned to guide physicians through this important undertaking. We also maintain relationships with a carefully curated network of professionals who can assist with vital aspects of the transaction process, including banking firms, tax specialists, financial advisors familiar with medical practices, and certified practice evaluation firms.

How Do You Prepare for Buying an Existing Medical Practice?

If you are considering purchasing an existing medical practice for sale, reflecting on your goals and values is vital to ensure the location is a good fit for your needs. The financial details of the prospective clinic are always a critical factor in any purchase decision. You will need to ensure the seller has the medical practice listed at a fair market value and you’ve factored in related costs for upgrades to medical equipment, refurbishing or remodeling the building to suit your operations, and maintaining ongoing operational expenses, such as the existing office lease agreement and payroll. Your accounting firm and legal team can help you evaluate the purchase price and determine if it is a successful medical practice and aligns with your finances and funding sources.

The suitability of the entire practice for your career aspirations is of equal importance to the financial aspects of the transaction. A careful evaluation of the clinic’s location, staff, clientele, operational processes, and opportunities for growth and expansion is crucial in determining whether it is a profitable and appropriate purchase. If your initial plans do not materialize, the team at MÉDICALOI can consult our extensive list of clinics for sale in Canada to help you find a location better suited to your requirements.

What is the Typical Progression of a Physician’s Clinic Purchase?

Every clinic purchase presents unique challenges and opportunities and, therefore, will proceed in a slightly different manner. However, each transaction will require some of the same basic steps by potential buyers and their advisors, including:

Drafting a Letter of Intent (LOI): An LOI formalizes the framework of your agreement with the seller. It defines essential features of the transaction, such as the purchase structure (i.e., whether it is a share sale or an asset sale), the identities of the parties involved, financing conditions, clauses and restrictive covenants, payment deposit terms, and timelines and requirements for due diligence and closing. This letter is non-binding but provides an outline for the upcoming purchase process.
Performing a detailed due diligence verification: Buying a medical clinic can involve significant risks as you take on the liabilities of an existing practice. Thorough verification of the clinic’s financial and legal health with the assistance of skilled lawyers, accountants, tax professionals, and certified practice valuation experts helps mitigate the chance of adverse outcomes or unexpected costs.
Making an Offer to Purchase: If you are satisfied with the results of the due diligence process, you may draft an official Offer to Purchase. This document will contain updated and more detailed information than your LOI and is generally legally binding once accepted by the seller. Your legal advisor should create and review this document with you to ensure all information is accurate and adheres to legal requirements and governmental regulations.
Drafting an extensive purchase agreement: The purchase agreement is a meticulously detailed document that covers all aspects of the medical clinics transition from one owner to the next. This is the final document relating to the sale, and its signing will represent the closing of the transaction.
Handling all post-closing considerations: It is essential to consider and plan for what will happen during the transition period after closing the sale. Your lawyer can evaluate your needs and determine what issues may need to be addressed, including tax considerations, associate agreements, employment contracts, and training agreements and related documents between the buyer and seller.

What Considerations Are Involved in Selling a Medical Clinic?

Finding a new owner for your health care practice who is willing to purchase it for the right price can be exceedingly challenging without knowledgeable guidance from your advisors. If you are looking to sell your family practice in the near future, taking proactive steps can help improve the value and appeal of your clinic to a potential buyer. Reviewing and making an honest assessment of your operational procedures, revenue streams, tangible and intangible assets, and other factors with the assistance of a trusted lawyer or financial advisor can help you determine the true value of your practice.

Often, addressing nagging financial issues and implementing minor operational upgrades can significantly increase your practice valuation. However, giving yourself enough lead time is key to effectively making these vital updates so they will appear on the documentation you present to prospective purchasers. Creating a robust exit strategy long before you intend to sell a medical practice is a sound business plan that can pay dividends for years to come.

How Do You Ensure You Meet All Necessary Requirements and Guidelines For Transferring a Medical Practice Following a Sale?

Both seller and purchaser have obligations related to the ownership transfer of the physician’s clinic. Failure to complete these tasks in a timely manner may result in censure by government agencies, loss of trust by valued clients, and turnover of crucial staff and associates. A lawyer with experience in medical business acquisitions can help you manage and organize these essential duties, including:

Notifying patients at the earliest opportunity of the changes in ownership and informing them of how their medical records will be transferred in accordance with provincial law.
Carefully migrating patient records and care plans, including follow-up on tests and procedures, to new physicians to ensure continuity of patient care.
Updating employment contracts and associate agreements to retain valuable staff members.
Complying with governmental regulations from the Ministry of Health, Canada Revenue Agency, and other organizations overseeing the operation of Canadian clinics.

Why Consult Our Medical Practice Purchasing Law Firm?

MÉDICALOI has a proven track record of assisting physicians with successfully purchasing and selling Canadian clinics. We possess in-depth knowledge of the challenges and opportunities present within the healthcare practice market. If you are planning to make the next big move in your medical career, our exceptional team can provide the detailed insight and personalized legal and business strategies you require to proceed with confidence. To learn more about our unique qualifications and how we can put our knowledge to work for you, contact our firm today at 438-805-5515 to schedule a free case evaluation.