Healthcare Law & Professional Practices

Case Study: Private Equity: A new retirement option for professionals

Opportunity: Our client, a 70 year old sole practitioner dentist, wanted to retire from the practice of dentistry.

Action: We advised that he should consider selling his practice to a Private Equity firm. A Private Equity firm raises funds from investors and seeks to purchase privately owned businesses. Historically Private Equity has shied away from investing in professional practices in New York State due to its strict regulations preventing non-professionals from owning professional practices and its strict fee-splitting laws. Private Equity has now cracked the code on how to properly structure the purchase of a professional practice in NYS and private equity firms are investing heavily in this area.

Result: Our client sold his practice to a Private Equity firm which already owned several dental practices in NYS. He received a higher purchase price than that offered by another dentist. The purchase price was allocated to capital assets so our client paid tax at the lower capital gains tax rates and a portion of the purchase price was offered as equity in the buyer so our client will participate in any growth of the private equity entity.

Our office has been involved with representing sellers of professional practices to private equity firms as well as representing private equity firms in acquiring professional practices. Please contact Robert B. Danziger or Joshua Levine to discuss this exciting possibility.