In a typical transaction for buying dental and medical practices, the buyer should engage in various commercial, legal, healthcare and other investigations to assure that there are no undisclosed judgments, claims, liabilities, and/or debts that could be transferred from the seller to the buyer unless the buyer is aware of them and explicitly assumes them. After all this is why you structured your deal as an asset purchase instead of a stock purchase.
Commercial due diligence includes, but is not limited to, reviewing business, financial, and tax documents of the selling party, review of corporate documents and good standing of the selling corporation, llc, or partnership, conducting a UCC lien check to make sure there are no undisclosed recorded liens or debts, reviewing real estate documents such as the lease for the office space, investigating court documents for any unsatisfied judgments or pending actions, and reviewing the employment contracts of the employees, managers, officers, and directors.
Healthcare law due diligence includes checking for any violations under the Stark law, Anti-kickback statutes, False Claim Act, and in “larger” deals and/or “smaller” markets they include compliance with Antitrust laws. It should also include investigating the licensing boards for any prior disciplinary actions by the practitioners that worked at the office in recent years.
A. Shane Kamkari, Esq.