Are you in the process of selling your practice? Have you found a purchaser and exchanged contracts? Congratulations if you have! However, please know that this is not the end of the process. There still remains some very important activities that need to be performed in the anticipation of settlement and depending on how much time you have between exchange and settlement; these activities may become rather urgent.
So now that contracts have been exchanged, it is time to reference back to this document to identify what contracts, documents, liabilities, information etc needs to be assigned or transferred to the purchaser upon settlement. These commonly include:
- Firm / company / business names, where applicable
- Trademarks, if any
- Phone and faxes numbers
- Email addresses
- Domain name(s)
- Post office boxes
- Internet connections
- Social media accounts
- Any licences, permits, patents, certificates or consents necessary to operate the firm
- Any plant and equipment leases or similar
- Office lease, where the firm will remain at its current location
- Software, the cost of which may be pro-rated
- Adjustment figures for annual leave, LSL, pre-paid fees and the like
Keeping in mind, where this involves a third party, you will need to contact these organisations or individuals to commence the transfer, assignment or negotiation process. Furthermore, your transaction may not include all, or even any of these, or perhaps other requirements, however the above are some of those that we commonly see.
Additionally, in anticipation of settlement, the two parties should agree on the communication approach to clients regarding this announcement. How is this information going to be shared? Will all clients receive an email or letter? Will the vendor personally telephone the larger clients? How will the staff be advised, if they aren’t already aware of the transactions? And importantly, words such as sale, selling or sold should be avoided at all costs. Clients are unlikely to respond well to being told they have been ‘sold’ to another party. Most importantly though, this communication piece DOES NOT take place until settlement has occurred, just in case something happens. Noting, the transaction has not taken place, the practice is not sold, until settlement has occurred.
For settlement to occur, payment must take place, cleared funds must be transferred, which typically takes place in the form of a bank cheque or EFTed funds. Until this takes place, the transaction is not complete, and whilst the vendor may have prepared all the necessary documents, transfers etc for the elements above, these are not signed, handed over, transferred until settlement has taken place. It’s simply a matter of having them all ready to go.
Following settlement, its then on with the planned and agreed transition activities including the communication of the transaction that has just taken place.