In this post, we will explain how accounts receivable (A/R) are one of the most important deal terms affecting valuation and risk. You will see why working with an experienced dental practice acquisition attorney can be key to structuring financial terms and ensuring optimal cash flow throughout the transaction, benefiting both parties.
Recently, we helped a dentist in Nevada purchase his first dental practice. As you may expect, one of the first issues we discussed during the early phase of the dental practice M&A lawyer discussions was how to handle accounts receivable.
In this case, the seller preferred a discounted lump-sum purchase of A/R, while our client, the buyer, wanted to collect receivables post-closing and to share the proceeds over time.
As experienced dental practice acquisition attorneys, we advised the client, resulting in an early agreement that avoided unnecessary delays and preserved momentum.
The deal was structured around two key terms, satisfying both parties:
Both arrangements are commonly used in dental practice sales, but it is always good to consult a legal expert to ensure you fully understand all the terms.
A dentist contract lawyer will typically advise to structure A/R in two main ways, depending on risk factors and the negotiation leverage:
Now, it's usually either/or, and the choice is rarely between both options. Which option will work better depends not only on the practice's financial condition but also on the negotiation context, leverage, and dynamics.
Of course, all deals need to meet the usual federal tax compliance and business registration requirements, as with the Nevada Secretary of State Business Services.
But all of that will vary from case to case, as each state has its own rules, which is why it is important to work with an experienced dental practice transition lawyer.
Accounts receivable is a critical component of dental practice transactions as it affects the deal structure and financial outcomes. Addressing it with appropriate clauses will address concerns for both parties, mitigating risk for the buyer and increasing the deal for the buyer.
Whether you are acquiring your first practice or preparing for a sale, getting early legal guidance will reduce the risk and ensure the deal goes through without headaches.
Contact Finn Legal now to schedule your consultation and protect your dental practice transaction from unnecessary administrative burden and financial risks.
Meta description:
Learn how a dental practice acquisition attorney handles accounts receivable in dental practice transactions, including negotiation structures, real examples, and compliance considerations for buyers and sellers.
