Asset Purchase Agreements for Los Angeles Dentists

Unlike a stock or membership interest sale, an APA focuses on transferring specific assets of the practice rather than ownership of the entity itself. For a dental practice, this often includes:

• Patient records and goodwill
• Office equipment and supplies
• Accounts receivable (sometimes)
• Leasehold interests or rights to assume an office lease
• Intellectual property, such as the practice name or phone numbers

California adds an extra layer of consideration. The state’s restrictions on the corporate practice of dentistry and oversight from the Dental Board of California mean that every APA must be carefully tailored. For example, transitions of patient records require compliance with privacy laws, and lease assignments often require landlord approval. These details matter, and overlooking them can delay or derail a closing.

A poorly drafted APA leaves both sides exposed. Common risks include:

• Disputes about which assets are included in the sale
• Uncertainty over ownership of patient charts and goodwill
• Buyers inheriting liabilities they didn’t agree to take on
• Conflicts if the seller remains active in dentistry nearby without clear non-compete language

In California, non-compete agreements are usually unenforceable, but an exception exists when a practice’s goodwill is sold. In that situation, the buyer may reasonably restrict the seller from practicing in a defined area.

Without clear exclusions in the agreement, buyers may also find themselves responsible for unpaid taxes or unresolved employee disputes. A well-structured APA is the backbone of a successful transition.

A strong APA sets fair, transparent terms that protect both sides.

For buyers, protections include:

• Assurance of clear title to all purchased assets
• Representations and warranties that the practice complies with laws and regulations
• Indemnification rights if hidden liabilities surface later

For sellers, protections include:

• Clarity about which obligations remain theirs
• Defined limits on liability after closing
• Payment structures that reflect the practice’s value

Buyers often push for broad representations covering compliance, finances, and disputes, while sellers aim to narrow these promises to limit liability. Striking the right balance prevents future claims.

Indemnity clauses also deserve close attention. These provisions determine who is responsible if problems arise post-sale, and overly broad language can unfairly shift risks.

An APA doesn’t transfer everything. Typical exclusions include:

• Liabilities that arose before closing
• The seller’s personal assets
• Certain employee-related obligations

Clearly defining both included and excluded items prevents misunderstandings.

Best practices for structuring dental APAs include:

• Ensuring all terms comply with California’s dental regulations
• Outlining how patient records will be transferred and safeguarded
• Addressing staff transitions early to give employees clarity
• Reviewing lease assignment obligations in advance so restrictions don’t delay closing

Another unique consideration is unfinished dental work at the time of closing. The APA should outline who completes the treatment and how payment will be allocated.