How to Sell a Medical Practice: A Complete Guide for Texas Physicians
Selling a medical practice is a major decision involving legal, financial, and operational considerations. Whether you’re retiring, relocating, or pivoting to a new opportunity, knowing how to sell a medical practice ensures a smoother and more profitable transition. This guide outlines the essential steps, team members, and legal considerations involved in the process — especially for doctors in Texas.
Why Doctors Sell Their Practices
Physicians decide to sell for many reasons — retirement, burnout, relocation, health issues, or better financial opportunities. In some cases, life events force an unexpected exit. Whatever your reason, understanding how to sell a medical practice helps protect your legacy and maximize the value of your business.
Build Your Advisory Team Early
Selling a medical practice requires guidance from experienced professionals. A well-rounded team will help you avoid costly mistakes, comply with state and federal laws, and make your practice more attractive to buyers.
Your team should include:
- A healthcare attorney
- A certified public accountant (CPA)
- A business valuation expert
1. Hire a Healthcare Business Attorney
An experienced healthcare lawyer is crucial when learning how to sell a medical practice. They’ll ensure compliance with HIPAA, Stark Law, anti-kickback statutes, and the Texas Medical Board. Your attorney will also negotiate the purchase agreement, manage risk, and structure the sale properly.
2. Work with a CPA
Your CPA will help you:
- Prepare financial statements
- Analyze tax implications of the sale
- Assist in choosing an asset vs. stock sale
They also provide clarity on how the sale will affect your personal finances.
3. Get a Proper Valuation
Valuing your practice is one of the most critical steps in how to sell a medical practice. A valuation expert considers tangible assets (like equipment) and intangible assets (like goodwill, patient base, and brand reputation). The outcome influences asking price, buyer interest, and final negotiations.
Understanding Fair Market Value
Most medical practices are sold based on “fair market value” — the price a willing buyer and seller would agree on in an open market. While FMV provides a baseline, the final sale price also reflects buyer financing, competition, and market conditions.
Attracting Multiple Buyers
Having multiple interested buyers often leads to a higher sale price. Reach out to:
- Local hospitals and health systems
- Physician networks and colleagues
- Competitors and practice management firms
Marketing your practice properly plays a huge role in how to sell a medical practice successfully.
Prepare Your Practice for Sale
Before listing your practice, make sure to:
- Clean up financials
- Resolve outstanding liabilities
- Review contracts and leases
- Organize employee and vendor records
These steps improve buyer confidence and speed up the due diligence process.
Preliminary Agreements to Protect Yourself
Even before the formal sale, legal documents can protect your interests.
Letter of Intent (LOI)
An LOI is a non-binding agreement that outlines basic sale terms, such as price, structure, and timeline. It serves as the foundation for negotiating the final deal.
Confidentiality and Non-Solicitation Agreements
As the buyer reviews financials, patient data, and employee information, use confidentiality agreements to prevent misuse of sensitive information. A non-solicitation clause ensures the buyer doesn’t poach your staff or patients during the sale process.
Decide on the Sale Structure: Asset vs. Stock Sale
Understanding the sale structure is key in learning how to sell a medical practice. You’ll typically choose between:
- Asset Sale: The buyer purchases specific assets (equipment, goodwill, licenses). This is more common and limits the buyer’s liability.
- Stock Sale: The buyer acquires the full practice entity, including debts and obligations. This may benefit the seller from a tax or simplicity perspective.
Your lawyer and CPA will help determine which is better for your situation.
Due Diligence for Both Parties
Due diligence involves a deep review of the practice to ensure both buyer and seller are protected.
Buyer’s due diligence includes:
- Financial records
- Patient volume
- Contracts and liabilities
- Licensure and compliance
Seller’s due diligence includes:
- Verifying buyer qualifications
- Ensuring financing is secured
- Checking buyer’s legal and medical standing
Comply with Corporate Practice of Medicine Laws
Texas enforces the Corporate Practice of Medicine (CPOM) doctrine, which restricts non-physicians from owning or controlling medical practices. If you’re selling to a non-physician entity, your legal team must structure the sale to avoid CPOM violations — a key step in knowing how to sell a medical practice the right way.
Confirm Licensure and Financial Capability
Ensure the buyer:
- Holds the appropriate state and medical licenses
- Has no disciplinary history that could disrupt the transaction
- Can fund the purchase through financing or personal capital
If seller financing is involved, perform a credit check and require guarantees.
Transferability of Third-Party Contracts
Some contracts, such as office leases or vendor agreements, may not be assignable without landlord or vendor approval. Failing to review these early could delay or derail the sale. Make sure to review all contracts and address any limitations before closing.
Finalizing the Sale: The Purchase and Sale Agreement
The Purchase and Sale Agreement (PSA) is the core legal document. It should include:
- Basic Terms: Structure, price, closing date
- Warranties and Representations: Promises made by both parties
- Assets and Liabilities: Clear list of what’s being transferred
- Restrictive Covenants: Non-compete and non-solicitation terms
- Termination Clause: Conditions that allow either party to exit
An experienced healthcare attorney will help negotiate and draft the PSA.
Patient Medical Records and Notifications
Another key part of learning how to sell a medical practice is handling patient records correctly. You must comply with HIPAA and state laws regarding:
- Patient notification of practice ownership change
- Retention and transfer of medical records
- Ensuring continued access to care
Your attorney can provide a transition letter template and guidance.
Create a Transition Plan
Work with the buyer to create a plan for:
- Introducing the new provider to staff and patients
- Retaining key employees
- Minimizing disruptions in operations
A smooth transition helps protect your reputation and sets the new owner up for success.
Contact one of our attorneys at Dike Law Group and schedule a meeting so we can discuss at dorismeet.com.
