When you start to consider selling your dental practice, there are a number of legal requirements and commercial considerations of which to be aware. As you may know, the dental industry has recently been deregulated. This changes some of the requirements for who can own and operate a dental practice. This article will explain the consequences of this deregulation and set out the legal issues which impact the process of selling your dental practice.

Dental Industry Deregulation

Before the deregulation of the industry, the rules surrounding who could be a dental practice owner were strict. However, since its deregulation in 2011, non-dentists have been able to own and run dental practices. These people include hygienists, dental assistants, oral health therapists and practice managers.

Your Client List and a Non-Disclosure Agreement

Dentists have to comply with the Privacy Act 1988 (Cth), which applies Australia-wide, and their state or territory legislation, which governs health records. You may need to publish a public notice (such as in a newspaper) to notify the public that you are selling your dental practice, including what you will be doing with your client list. Clients can then notify you if they do not wish for their details to be shared with prospective purchasers or the successful purchaser.

Often, a non-disclosure agreement can be given to a prospective buyer before you show them important business documents such as your financials or client list. This protects your commercially sensitive information from being shared with third parties.

Finding a Buyer

Since there are no strict rules regarding who can own and run a dental practice, the pool of prospective buyers is wide. You should consider whether you will be staying on as an employee or contractor of your practice; this may be attractive to a buyer who is not a dentist. A large part of the goodwill value is likely tied to your patients and their client experience. Therefore, your buyer may want you to stay on to assist with providing services despite the change of ownership.

It will be important for you to have all relevant documents available for your potential buyers to assess. Typical documents include:

  • your HICAPS preferred provider status;
  • equipment details, including any loan documents that might be applicable;
  • contractor or employment agreements;
  • bookkeeping and financial documents; and
  • a list of patient information (subject to privacy laws), including a breakdown of patients.

Your Client Records

Dentistry practices have certain privacy obligations to uphold under both federal and state or territory laws. Your purchaser will likely want to see your client list so they can assess:

  • the success of your business;
  • how many active clients you have; and
  • the maintenance and compliance of these records.

Typically, you would show a purchaser a client list after they have already signed a sale of business agreement. You may also want your purchaser to sign a non-disclosure agreement before you provide them with a client list. Some states or territories may also require that you notify your clients before showing the list or the settlement of your business sale.

Employment and Contractor Agreements

You also need to contemplate whether your staff will continue to stay on with the new owner. Check the national employment standards and your employment agreements to see whether you need to notify staff and, if so, what the notification period should be.

Often, a dental practice also has contractor agreements. Your purchaser will want to look at these. It is likely they will want to transfer these contracts over as part of the sale process.

Equipment, Supply Agreements and Stocktake

Your purchaser, as part of their due diligence, will likely want to look at your leasing documents for the equipment you have on loan. You may also want to check your documents and ensure you can transfer this equipment. To speed up the process, it is a good idea to have this organised beforehand. This way, the prospective purchaser can examine the documents and equipment when they visit your premises.

Your purchaser will also want to have plenty of time to organise and renegotiate new supply agreements. You may need to provide a guarantee that your suppliers will continue to supply them for the next three months, as an example.

Transferring the Lease

As part of the settlement process, you will need to transfer your lease to the new purchaser with a document, known as a deed of assignment.  The process will depend upon whether you have a retail or commercial lease in place. Retail leases impose more obligations and the transfer process is stricter. Each state or territory has different rules surrounding retail leases.

Regardless of the type of lease, you must ensure you have the landlord’s permission. Alternatively, your purchaser may prefer to take a new lease. This would involve you surrendering your current lease.

Key Takeaways

Selling your dental practice can be tricky. Not only do you have to navigate the usual sale of business process, but you also need to ensure you comply with privacy laws regarding your clients’ sensitive information.

If you are looking to sell your dental practice, get in touch with LegalVision’s sale of business lawyers on 1300 544 755 or fill out the form on this page.

Evangelia Douventzidis
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