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Hidden Facts About Selling a Medical Practice in Texas

The Hidden Challenges of Selling Your Practice

Many doctors think selling a medical practice is simple. Just find a buyer, sign a contract, and walk away with a check. Selling a medical practice in Texas has unique legal and financial hurdles. They can catch you off guard. Texas has strict laws on ownership, patient records, and non-compete agreements. 

Who You Can (and Can’t) Sell To

Texas law limits who can own a medical practice. Texas, unlike other states, bans corporations and non-physicians from owning a medical practice. They must set up specific business structures to comply with the law. This means that private equity firms or business groups looking to buy your practice will have to structure the deal carefully. If this isn’t done correctly, the sale could be delayed or even blocked. Before you finalize any deal, it’s important to make sure the buyer is legally allowed to take ownership.

The Risk of Post-Sale Legal Issues

Even after you sell your practice, some liabilities can still follow you. Medicare and Medicaid audits don’t stop just because you’re no longer the owner. If the practice had billing errors or compliance issues before the sale, you could still be responsible. The same goes for malpractice claims. If you don’t have proper tail coverage, you could find yourself dealing with lawsuits years after leaving. These hidden risks make it essential to have the right legal team on your side.

The Importance of Patient Transitioning

Patients are the lifeblood of any medical practice, and a sudden, unplanned transition can lead to patient drop-off. Buyers want to be sure that patients will stay after the sale. Texas law also requires you to properly notify patients and handle medical records correctly. If these steps aren’t followed, you could face legal trouble. A well-executed transition helps protect your reputation and ensures that the value of the practice stays strong. This is one of the most overlooked aspects of selling a medical practice in Texas.

How the Sale is Structured Affects Your Taxes

The way your sale is structured—whether it’s an asset sale or a stock sale—can have a major impact on your tax bill. Many doctors assume they’ll walk away with a lump sum, only to find out later that a big portion goes to taxes. Texas doesn’t have a state income tax, but federal taxes still apply. Without proper planning, you could end up paying more than necessary. A good legal and financial team can help you structure the deal in a way that maximizes what you keep.

Non-Compete Agreements Can Limit Your Future

Non-compete agreements often come up when selling a medical practice. So, it’s important to structure them carefully. Texas law allows non-competes, but they have to be reasonable in terms of time, geography, and restrictions. Some buyers try to lock sellers into agreements that are too broad, making it nearly impossible to work in the same area again. Negotiating fair terms upfront is key to protecting your future opportunities. This is another critical factor to consider when selling a medical practice in Texas.

Don’t Sign an LOI Too Quickly

A Letter of Intent (LOI) is often the first step in selling a practice, but signing too quickly can work against you. An LOI is usually non-binding. But, it often has exclusivity clauses. They prevent you from negotiating with other buyers. If you agree to unfavorable terms early on, you may struggle to renegotiate later. Before signing anything, make sure you fully understand what you’re agreeing to. Many sellers make costly mistakes at this stage simply because they’re eager to move forward.

Get Professional Guidance Before You Sell

The process of selling a medical practice in Texas is complex, and small mistakes can cost you big. Legal risks, tax issues, and patient transitioning all play a major role in making sure you get the best deal possible. At Dike Law Group, we help doctors sell their practices. We protect their financial and legal interests. Schedule an In-Person Meeting today to discuss your options and make sure your sale is smooth, profitable, and legally sound.

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