PART 3 OF 4: Common Mistakes Sellers Make

The missteps that cost sellers value — or the deal.

Even a strong practice can sell for less than it should, or fail to close, when avoidable errors go unaddressed. The pitfalls below recur in California medical practice sales. Recognizing them early is the surest way to protect both price and certainty of closing.

• Selling to an ineligible buyer. Entering a deal that cannot lawfully transfer practice ownership under the Corporate Practice of Medicine doctrine wastes time and can collapse late in the process.

• Waiting to fix compliance issues. Letting a buyer discover billing, coding, or HIPAA problems during diligence hands the buyer leverage to cut price or walk away.

• Disorganized or unnormalized financials. Presenting messy books, or failing to show the practice's true earning power, undermines valuation and buyer confidence.

• Overlooking tax consequences of the structure. Failing to plan for how the sale is structured and how the purchase price is allocated can leave a seller with a materially smaller after-tax result.

• Mishandling staff and provider transitions. Ignoring wage-and-hour compliance, misclassification exposure, or the mechanics of transitioning employees can create liability that follows the seller.

• Agreeing to an unenforceable or overbroad non-compete. Signing a covenant that is not properly tied to the sale-of-goodwill exception — or that is broader than California permits — can create later disputes.

• Neglecting post-closing obligations. Overlooking records retention, patient notification, and continuing representations can expose a seller well after the deal is done.

How West Coast Health Law Can Help

We help sellers anticipate and avoid these pitfalls — protecting valuation, structuring the deal for a clean tax result, and ensuring the terms hold up after closing.

West Coast Health Law offers a FREE consultation which you may schedule by clicking the button on our website.

This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every transaction is different; consult a qualified attorney about your specific situation.