Tips & Traps to Structuring a Practice Offer

Tips & Traps to Structuring a Practice Offer
Structuring an offer to either sell or buy a practice is one of the fundamental pillars in the practice sale/transaction process. Typically, the purchaser would submit an offer to purchase a practice, however the vendor could also define the type of terms that they would like to see and would accept as part of a transaction. It’s completely open to the negotiating parties.

Therefore, to be successful there are a couple of key points, which can be both tips and traps, to keep in mind.

1. Give plenty of detail – any offer should be more than ‘I’ll pay you ‘x’ dollars for your practice’. It should be a consideration of many factors. If you would like further information about what to potentially include in an offer, please contact us.

2. Ensure the offer is competitive with market – this is absolutely fundamental. The number of deals we see die due to non-competitive terms are countless. If the terms of the offer are too far off base either way compared to what is currently happening in the marketplace, you are unlikely to succeed.

3. Submit the offer in a timely manner – if you are really keen to get this transaction done, please attempt to have an offer on the table within one to two weeks of meeting with the other party.

4. Be sure that you are willing to commit to the deal as it is outlined in the offer – not understanding the ramifications of the terms that are outlined in the deal or trying to change them after they have been presented to the other side can cause major problems. If you are unclear what a term is intending, seek clarification. It’s also imperative to have a good solicitor on side to assist with this process once it goes to contract stage.

5. Make sure you can finance the deal – nothing spells disaster more than the purchaser submitting an offer which is then accepted, only to find they can’t secure funding. Trying to renegotiate a deal to suit financing after acceptance will leave a sour taste in everyone’s mouth and be a short road to failure.

6. Be mindful of any expiration or acceptance dates – it would be a great pity to have a good offer on the table only to find it lapses.

If there are any other details which you aren’t sure about or would also like considered as part of the proposal, make sure they are highlighted early. Trying to slip last minute terms in to a deal can cause angst.

If you are a purchaser or vendor that would like some additional assistance with the offer process, please contact Michelle Knights on (02) 9233 4333 or via michelle@robknights.com.au. She is able to review an offer from either the vendor or purchaser perspective, or actually structure an offer on your behalf.