Reading time: 6 minutes

Selling your physiotherapy business is a major commercial decision. When you decide to sell your business, your next steps are to find a buyer and negotiate the commercial terms. Once you have negotiated the commercial terms of the sale, you will need to complete the legal process. This article will explain the key considerations to make if you want to sell your physiotherapy business. 

Due Diligence

When you are selling your physiotherapy business, you should expect your prospective purchasers to make enquiries about business operations when conducting their due diligence. As part of this process, buyers will want to look at your business’:

  • financial information;
  • business performance;
  • legal compliance;
  • major contracts; and
  • assets included in the sale.

You should prepare for the purchaser to request this information and be able to assist them.

If there are any contracts which are vital to your business’ operations, you should check if you can assign these to the purchaser. You may need to seek consent from the other party to each contract before you can do so.

Lease

The location of your physiotherapy business has likely been a key factor in its success. The purchaser will likely wish to continue to occupy the same premises. When you are selling your physiotherapy business, you have two options for handling the lease. You can either:

  • transfer the existing lease or sublease; or
  • surrender your lease, allowing the purchaser to enter into a new lease or sublease.

The sale of business agreement should set out the settlement obligations to either assign or surrender the lease. Therefore, you should decide with the purchaser how you will handle the lease before your lawyer prepares the sale agreement. 

Alternatively, you may be operating your business from a premises under a licence. This is common if you operate within a medical centre. In this case, you will need to surrender your licence to allow the purchaser to enter into a new licence to occupy.

Whichever your situation, you will need to notify the landlord of your plans to sell the business and obtain their consent. It is common for the landlord’s lawyer to prepare the relevant documentation and provide them to the purchaser.

Client Information 

Existing customers are important for the revenue of any business. If your physiotherapy business has a client list or customer database, you should include this in the sale. 

Privacy Considerations

If you are transferring your customer database, you will need to comply with Australian privacy laws. There are specific requirements that apply to the transfer of personal information during a business sale. As such, you should ensure that you are complying with these requirements and transferring the customer list in accordance with your legal obligations. 

It is good practice to:

  • de-identify any customer information that you provide to the purchaser during the due diligence process; and 
  • only disclose personal information necessary for them to assess the business.

Generally speaking, a seller will not always need to seek consent from the customers of the business to transfer their personal information if:

  • the purchaser is an APP entity or about to become one as a result of the purchase (i.e. an entity which is required to comply with the Privacy Act);
  • you are selling the business as a going concern; and
  • the purchaser plans to use the information in the same way and for the same purpose as you.

In some instances, you may have to obtain customer consent. This is typically the case where the purchaser may use the information differently after the sale. 

Equipment 

When you sell your physiotherapy business, you will likely need to sell your equipment (such as treatment beds). If you own the equipment outright, you should include it as part of the sale and include it in the purchase price. 

If you do not own the equipment outright, you will need to check your equipment lease and see if you can transfer it to the purchaser. You may need to seek consent to do so. The sale of business agreement should specify whether:

  • you will pay out this outstanding amount prior to completion; or 
  • the lease is to be transferred to the purchaser after completion. 

Employees

When selling your business, you will need to consider whether your existing employees will stay on with the purchaser’s new business. If the purchaser agrees to purchase the business and take on your employees, they will need to be re-employed by the purchaser. 

You will also need to negotiate who will need to honour any employee entitlements, such as:

  • personal leave;
  • existing working arrangements; and 
  • parental leave. 

If the purchaser does not agree to recognise these entitlements, you will need to pay them to the employees before settlement. 

If the purchaser does not agree to take on any employees as part of the sale, you will need to terminate all employees and pay out: 

  • any termination costs; and 
  • all outstanding employee entitlements.

Intellectual Property 

Intellectual property (IP) is crucial to any business. It can include:

  • your business name;
  • your domain name;
  • any social media channels;
  • your marketing materials;
  • trade marks; and
  • the content on your website.

An important aspect of selling your business is confirming that you are the legal owner of any IP assets you plan to sell. 

Restraint of Trade 

An important clause of your sale of business agreement will be a restraint of trade clause. This clause prevents you from setting up a new physiotherapy business, or working for another physiotherapy business, for a specified period and within a specified geographic area after you sell the business. As the vendor, you should make sure that the clause is reasonable. You will also need to make sure that you understand how the restraint clause works, as there can be consequences for breaching a restraint of trade clause. 

Key Takeaways 

If you have decided to sell your physiotherapy business, some of the key considerations to keep in mind include: 

  • which assets form part of the sale; 
  • handling customer information correctly; 
  • handling the lease transfer; 
  • transferring the IP of the business;
  • how you will deal with your employees; and 
  • the restraint of trade clause. 

If you have any questions about selling your business, contact LegalVision’s business sale lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Jessica_Coventry
Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards