Ortho Tribune United Kingdom Edition

20 Ortho Tribune United Kingdom Edition | 7/2016 ORTHO BUSINESS Taking on work in progress in practice transaction By Amanda Maskery When purchasing a practice, among the many factors clinicians need to consider is the situation regarding work in progress (WIP), an area that can be particularly complex in ﬁnalising the details of the trans- action. Ongoing work that has not yet been completed, though it will have been at least partly paid for, could well take up a signiﬁcant proportion of one’s capacity in the early stages of ownership, so it is vital to know exactly what one is taking on. Furthermore, from the outset, buyers will need to be clear about the level of WIP against any payments already re- ceived, as well as the payments outstanding. From the seller’s point of view, it is therefore important that an up-to-date list of WIP be kept in the run-up to completion. The sit- uation is easier regarding WIP if the seller is remaining with the practice, but if exiting completely, then careful determination of ex- actly what is to be inherited needs to be made at the earliest point. It also needs to be set out in the sale agreement the terms on which the buyer can claim fees for the work. Some WIP will have been partly paid for by the time the transaction is completed, but there must be a consideration of how that will be structured. For example, if 75 per cent of the fees for the WIP have been paid by the patient, but only 50 per cent of the work carried out by seller, it must be determined whether the buyer will keep the 25 per cent balance or whether this will remain with the seller at completion. In many situations, the buyer will be able to claim a proportion of money in respect of the per- centage of work he or she will be carrying out to complete the treat- ment. However, in other circum- stances, a decision may be made not to pursue this. It could be deemed that cases paid up at the outset or partly paid and those paid at the end of treatment will balance out at completion, rather than carrying out complex calcu- lations on each piece of WIP. WIP can indeed be a complex area, so it is important that all parties involved in the trans- action sit down and work through an up-to-date list of WIP shortly before completion and work out exactly what is happening with each piece of unﬁnished work. A carefully drafted sale agree- ment is extremely important in this scenario, and consulting spe- cialist dental advisers is strongly recommended. Both the seller and buyer need clarity on how WIP will be trans- ferred and who will retain what percentage of fees. Establishing this will enable a smooth transac- tion to the beneﬁt of the business and patients alike. Amanda Maskery is one of the UK’s leading dental lawyers. She is Chair of the Association of Specialist Providers to Dentists (ASPD) in the UK and a Partner at Sintons law ﬁrm in New- castle. Amanda can be contacted at amanda.maskery@sintons.co.uk. practice management Short-term gains… long-term problems? trends & applications Vibration therapy in orthodontics: Realising the beneﬁts industry report From straightforward to complex cases 12016 issn 1868-3207 Vol. 1 • Issue 1/2016 ortho international magazine of orthodontics International Magazines ortho international magazine of orthodontics Shipping Address Name Address Zip Code, City Country E-mail Date, Signature PayPal Credit Card Credit Card Number Expiration Date Security Code F +49 341 48474 173 subscriptions@dental-tribune.com EUR 22 per year (2 issues per year; incl. shipping and VAT for customers in Germany) and EUR 23 per year (2 issues per year; incl. shipping for customers outside Germany). Your subscription will be renewed automatically every year until a written cancellation is sent to Dental Tribune International GmbH, Holbeinstr. 29, 04229 Leipzig, Germany, six weeks prior to the renewal date. SUBSCRIBE NOW! www.dental-tribune.com AD F +4934148474173

Ortho Tribune United Kingdom Edition

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