Laws and Regulations for Selling a Medical Business

Learn about legal issues you may encounter when selling a medical practice

Whether you are contemplating a medical doctor, dental, chiropractic or veterinary practice sale, there are key legal issues to consider. Laws and regulations govern everything from sale preparation to the sale valuation or appraisal, and  even tax ramifications.

It is important to have the proper resources when dealing with medical business sales. You may choose to outsource this knowledge through a healthcare practice broker, or become self-taught.  At the very least, you will need an overall understanding of the various laws and regulations governing medical practice sales. Consider the following ways to arm yourself with more information about medical business sale transactions:

1. Read about the IRS 1031 law and how it can help save on the capital gains front.

2. Learn from experts in the industry -- hire a healthcare practice broker who specializes in handling a medical business for sale.

3. Consider educating yourself on the laws and regulations you are likely to encounter when selling a medical practice.

 

Understand the impact of Section 1031 on a medical business for sale

Under Section 1031, if a property is traded or exchanged for a similar type of property, there is a capital gains deferral and the taxpayer is subject to depreciation recapture taxes. Section 1031 offers a physician or veterinary practice sale some options worth considering.
Try: A Medical Practice Brokers' article discusses how IRS section 1031 tax deferred real estate exchanges rulings affect a health care practice sale. The Physician's News Digest site also contains an analysis of 1031 and how physicians can defer capital gains taxation when a practice is sold.

Hire a company that specializes in preparing a medical business for sale

Companies that specialize in leading a medical practice through the process of a sale are experts in understanding laws and regulations for these transactions. Consider interviewing two or three medical practice brokers to make sure you are comfortable with their knowledge of rules and regulations before settling on one.
Try: Professional Practice Sales has been in the business of medical business sale brokering since 1966. Transition Consultants has been a health care practice broker for more than 25 years.

Purchase materials or browse web sites for legal background when selling a medical business

Consider becoming self-educated about laws and regulations you are likely to face when selling a medical practice. Having a greater understanding will help you ask educated questions if dealing with brokers.
Try: The Texas Medical Association sells a book entitled "Transitions: Legal Considerations in Selling or Closing a Medical Practice". Greenbranch Publishing specializes in medical practice books as well as The Journal of Medical Practice Management and its spin-off books.

Copyright © 2011 Business.com, Inc. All Rights Reserved.

---