6 Common Questions -- & -- Their Answers
When you sell your practice, expect that your Asset Purchase Agreement (Sale Contract) will include a section that addresses the letter that you will be required to send to your patients, introducing your buyer and describing what you will be doing, such as: retiring; changing your career direction; or, staying on to work in the practice for your buyer after the sale. If you don’t have this section added to your Asset Purchase Agreement, it is almost certain that your buyer will require it to be added.
Why Are The Letters Sent?
- To reduce the risk of suffering claims of abandonment of your patients, it is highly advised to send a letter to inform patients of your leaving the practice and to let them know the arrangements that you have made to provide for their continued dental care, and to let them know who has their patient records. Because of this, before your letter is finalized and printed in mass, have your attorney review the draft of your letter. Have your attorney make sure that you are covering all of your legal requirements in regard to your notifications to patients.
- As part of your sale, you are selling and transferring your goodwill, that you have with your patients, to your buyer and part of the sale price paid to you is for transferring that goodwill. To transfer your goodwill, it is necessary for you to introduce your buyer to your patient base.
Who Do You Send Letters To?
When Should Your Letters Be Mailed?
Sellers should not risk that letters go to patients, announcing their transitions, and then something prevents the sale closings from occurring as planned. It’s like it is commonly said: You can’t put the toothpaste back in the tube. Therefore, the letters should be prepared in advance of the sale’s closing, placed in envelopes, and addressed before the planned closing of the sale. But, they should not be taken to the Post Office to be mailed until immediately after the sale has actually closed.
If a sale closes on a Friday, as many do, and the letters are mailed later that day, there may be patients that come into the practice in the early part of the following week that have either not yet received their letters or not yet opened their letters. Sellers and buyers should want to avoid surprising patients with a new dentist treating them without any prior notification. Therefore, we believe that the Asset Purchase Agreement should have a provision that calls for the office staff to call all patients scheduled in the first 5 business days after the sale’s closing, to notify them of the transition, introduce the new dentist that is assuming the practice, and let them know that Dr. XXXX will be providing their dental care.
What Should The Letters Say?
- Length. People don’t want to read long letters. It is best to keep it to one side of one page.
- Divided Content. Sellers often want to expound on their careers, how much it has meant to them, how much they appreciate the patients’ trust, etc. That is needed, and is good to a point. But, equal space should be given to introducing your buyer, providing the buyer’s history, educational credentials, practice experience, etc.
- Assuming or Continuing The Practice. Patients aren’t likely to appreciate the thought of being bought or sold. Therefore, saying that Dr. XXXXX is buying your practice may not be the best approach. It may be better received if sellers tell their patients that Dr. XXXXX is “assuming” their practices or “continuing” their practices.
Additional things to address in the letter, include but are not limited to:
- Letting patients know that their dental records will remain with the practice.
- Telling them that the office staff will contact them to keep them on schedule for their check-ups and cleanings.
- Telling them to call the practice if they have any questions.
- Telling patients, if it is true, that all of your employees will continue to be with the practice.
Who Pays For The Letters?
Can The Buyer Approve The Letter -- Or -- Add To The Letter?
In addition to approving the letter, in the Asset Purchase Agreement it can indicate that the buyer is given an opportunity to produce a second letter to the patients, at the buyer’s expense, in which the buyer further introduces him / herself and provides more detailed information about him / her. This letter may include a picture of the buyer or a picture of the buyer with his / her family. It may tell more about the buyer’s education, experience, where the buyer is from, or what his / her outside interests are, etc. The buyer’s letter can be added in behind the seller’s letter, in the same envelope, without increasing the postage expense. As with the buyer approving the seller’s letter, the Asset Purchase Agreement should require that the buyer’s letter has to be approved by the seller.
If you plan to sell your practice now, or in the near future, start making and keeping notes on some of the things that you’ll want to include in your letter to your patients. When it’s time to write your letter, your notes will make it easier.