What Assets are Transferred
in the Sale of a Practice?
Recent practice sales have reminded me that not all sellers are fully aware of the various assets typically included in a practice sale. Understanding these inclusions and the essential prep work needed before settlement can make the entire process smoother. Here’s an overview of common items involved in a practice sale and some preparation tips to ensure a seamless transition.
1. Goodwill
Goodwill is often the primary asset in a practice sale, reflecting the trust, reputation, and client relationships built over time.
2. Clients, Client Records and Files
Client-related records—such as files, working papers, books, and historical records—are typically included. Many practices now store this information in the cloud or operate paperlessly, though some older practices may still hold physical files, like trust deeds. Buyers usually prefer only necessary records, with the seller responsible for destroying or returning any unneeded files.
3. Software Licences
Software licences essential for servicing clients or managing the practice may need to be transferred. If these have annual costs, both parties should agree on prorated payments where appropriate.
4. Business Name and Trading Rights
While buyers rarely acquire the vendor’s legal entity due to liability concerns, they do want the right to the practice’s trading name, even if they don’t plan to use it. This name is part of the firm’s goodwill and must be available if desired.
5. Phone and Fax Numbers
Transferring phone and fax numbers is standard, and in some cases, the buyer may even request the vendor’s mobile number to ensure continuity for clients accustomed to that contact method.
6. Website and Email Addresses
These digital assets are essential for the buyer. Sellers who use a single email address for both business and personal correspondence should consider separating personal communication well in advance to facilitate a smooth handover. It’s possible to address privacy concerns while ensuring all professional communication is transferred appropriately.
7. Intellectual Property
Any additional intellectual property relevant to the practice, such as proprietary methods or content, should also be transferred.
8. Plant and Equipment
Physical assets, if included, often come at an additional cost. If any equipment is under lease or finance, arrangements may need to be made to enable transfer upon settlement.
9. Work in Progress (WIP)
In rare cases, buyers may purchase outstanding WIP, though efforts are typically made to determine the recoverable amount. For practices with longstanding WIP, it’s wise to assess and cull uncollectable items before the sale.
Common Inclusions in a Professional Practice Sale
These inclusions demonstrate the need for detailed preparation before settlement. Just as client communication is timed for post-settlement, the transfer of these assets should occur immediately after. To make this transition smoother:
1. Compile a Checklist
If you’re considering selling your practice, start by listing assets that may need to be transferred. This preparation will save you from scrambling at settlement.
2. Organise Documentation
Have all paperwork ready to go for a quick and efficient handover. Spending the initial days post-settlement transferring everything can set a strong foundation for the buyer and ensure a seamless transition.
Selling a practice can be complex, but with thoughtful preparation, you can make it a straightforward and rewarding experience. By planning ahead, both you and the buyer can focus on what matters—continuing to serve clients and growing the practice’s legacy.
Preparing for Settlement
If you need assistance with buying or selling a practice, Rob Knights & Co is here to help. With over 50 years of experience, we provide expert valuation and consulting services tailored to meet your unique needs.
Contact us today to discuss how we can support your practice transition journey.
