Your Guide to Legal Counsel in Healthcare M&A: Protecting Your Practice and Your Future

When you decide to sell your medical practice, one of your first thoughts might be, “I’ll call my lawyer.” You trust them. They’ve handled your contracts and business matters for years. This is a sound first step, but with a critical caveat. Selling a healthcare practice is not like selling any other business. The legal complexity is an entirely different order of magnitude, and using a generalist is one of the most expensive mistakes a physician-owner can make.

An experienced healthcare M&A attorney is a core member of your expert team, acting as your regulatory and risk shield. This counsel is a key part of the Healthcare M&A Advisory Team that ensures your years of hard work are protected throughout the transaction.

Why Your General Business Lawyer Isn’t Equipped for a Healthcare Deal

Asking a general business attorney to handle the sale of your medical practice is like asking a family physician to perform a complex neurosurgery. Both are excellent doctors, but their expertise is highly specialized. A generalist sees a business transaction; a healthcare M&A specialist sees a transfer of clinical operations governed by a dense web of federal and state laws.

Your healthcare-focused legal counsel understands the nuances of regulations that can derail a deal or create massive post-closing liabilities. These include:

• The Stark Law and Anti-Kickback Statute (AKS): These laws govern physician self-referrals and prohibit rewarding business referrals in federal healthcare programs. A deal structure that looks fine on a standard business spreadsheet could violate these statutes, leading to severe penalties.
• HIPAA and HITECH: Buyers need to perform diligence on your patient data and operations, but you must provide that access without violating patient privacy laws. A specialist knows how to set up a compliant data room and manage information transfer.
• State-Level Regulations: Each state has its own rules. Many have their own versions of anti-kickback laws or fee-splitting prohibitions. Critically, some states follow the Corporate Practice of Medicine Doctrine, which restricts who can own a medical practice, directly influencing how a deal with a private equity group or MSO must be structured.

A generalist has to learn these rules on the fly, costing you time and money. A specialist already knows the playbook.

A Stage-by-Stage Breakdown of Your Attorney’s Role

Your legal counsel’s work is woven into every phase of the M&A process, providing a layer of protection from initial structuring to the final signature.

Phase 1: Deal Structuring & Preparation

Before your practice is ever shown to a buyer, your lawyer works with your M&A advisor to position it for a smooth sale. They help decide on the optimal deal structure (e.g., asset sale vs. stock sale) based on liability, tax, and licensure factors. They also conduct a preliminary review to spot and fix any potential legal issues before they can become problems in a buyer’s eyes.

Phase 2: Managing Legal Due Diligence

This is where your attorney proves their worth. While your M&A advisor manages the overall process, your lawyer takes the lead on the buyer’s legal diligence requests. They meticulously organize and review critical documentation, including:

• Regulatory Deep Dive: Auditing historical and current operations for compliance with all relevant healthcare laws. This is a crucial step for navigating Stark Law and Anti-Kickback requirements that buyers will heavily scrutinize.
• Contractual Review: Scrutinizing all material agreements, from payer and vendor contracts to equipment and real estate leases, to identify any clauses that could hinder the sale.
• Employment & Provider Scrutiny: Analyzing all physician employment contracts, non-compete clauses, and employee benefit plans to ensure a clean transfer of staff.
• Corporate Housekeeping: Confirming that your practice’s corporate records, licenses, and permits are complete and in good standing.

Phase 3: Negotiating and Drafting Key Documents

Once a buyer is serious, the deal moves from business terms to legally binding commitments. Your attorney is central to this phase. They review the non-binding Letter of Intent (LOI) to ensure the high-level terms don’t contain hidden legal traps.

Their primary responsibility is drafting and negotiating the definitive Purchase Agreement. This document contains the critical representations, warranties, and indemnification clauses that define what you are promising about the business and what happens if those promises are broken.

Phase 4: Closing and Beyond

As the deal nears the finish line, your lawyer manages the flurry of activity required to close. This includes coordinating regulatory filings like Change of Ownership (CHOW) notifications, ensuring all legal conditions are met, and advising you on any post-closing obligations, such as transition services or earnout requirements.

The “Deal-Killers”: Top 3 Legal Risks Your Attorney Prevents

1. The Skeleton in the Compliance Closet. A buyer’s diligence team is trained to find problems. An undiscovered historical billing error or an informal physician compensation arrangement can bring a deal to a halt or lead to a significant reduction in your valuation. Your attorney’s job is to find and help resolve these issues first.
2. The Wrong Deal Structure. The difference between an asset and a stock sale can have colossal tax implications and determine which liabilities transfer to the buyer and which stay with you. Without expert legal guidance, you could end up with a much smaller net proceed or be on the hook for issues you thought you sold.
3. Leaky Physician Contracts. The value of your practice is tied to its providers. If post-sale employment agreements have poorly defined non-competes or unclear compensation terms, it creates enormous risk for the buyer and could jeopardize your earnout payments.

Selecting the Right Healthcare M&A Legal Counsel

Finding the right counsel is about asking the right questions. Look for a partner who is both an expert in the law and a veteran of the deal-making process.

Category	Question	What You’re Listening For
Experience	“How many physician practice transactions have you closed in the last 24 months, specifically in my specialty?”	Specificity and familiarity. They should know the recent deal flow, valuation trends, and key buyers relevant to you.
Process	“Describe how you coordinate with the seller’s M&A advisor during due diligence and negotiations.”	A collaborative mindset. They should see your advisor as a strategic partner to get the deal done, not a competitor.
Problem-Solving	“Walk me through a time a significant compliance issue was discovered mid-deal. How was it resolved?”	A proactive, solution-oriented approach. You want a lawyer who fixes problems, not just flags them.

Your Advisors in Sync: The M&A Advisor and Legal Counsel Partnership

It’s vital to understand the distinct roles. Your M&A advisor (like SovDoc) is the transaction’s quarterback. We focus on strategy, valuation, marketing the practice, negotiating business terms, and managing the entire process to maximize your outcome.

Your legal counsel is your defensive coordinator. They focus on risk mitigation, regulatory compliance, and translating the business deal into binding legal agreements that protect you.

At SovDoc, we don’t give legal advice. Instead, we work in lockstep with your chosen legal counsel. We ensure the legal strategy aligns perfectly with the financial and strategic goals of the transaction. This coordination prevents costly delays, miscommunication with the buyer, and ensures that every member of your team is working with one unified goal: a successful and lucrative closing.