FAQ - Brightley Commercial

Q: WHO IS BRIGHTLEY COMMERCIAL?

A: Brightley Commercial was established in 2002 by Robert Brightley a solicitor who qualified in 1983 and has over 20 years experience in dealing with business related legal work.

Q: HOW LONG HAS BRIGHTLEY COMMERCIAL BEEN WORKING WITH F4C?

A: Brightley Commercial first started working with F4C at the beginning of 2003 and, since then, Brightley Commercial has acted for dozens of chiropractors and dealt with many more chiropractic transactions. This work has mainly related to the sales and purchases of clinics, the buying and selling of clinic premises or leases of clinic premises but has also covered business re-structures and general business legal advice.

Q: WHAT LEGAL ISSUES SHOULD I CONSIDER WHEN SELLING A PRACTICE?

A: The process of selling a chiropractic practice is potentially complex due to the fact that the sale of a business often involves various legal rights and obligations concerning premises, staff, contracts with buyers of services, contracts with suppliers, arrangements regarding assets held on lease/ finance agreements and the transfer of the goodwill of the practice and all relevant intellectual property (including domain names, websites, logos and other documents in which copyright exists). All of these matters need individual attention in order to ensure that they are transferred and no liability retained by the seller. With that in mind it is sensible for a chiropractor thinking of selling a practice to ensure that the affairs of the business are in good order so that the process of the sale and all the legal scrutiny that goes with it is a smooth one. Therefore, proper records should be kept of arrangements with suppliers and patients, with landlords (if any) and the internal arrangements of a clinic including ownership of the clinic and contracts with staff (employed and self employed). A buyer will want to know a lot of information about these matters and lack of documentation will only raise questions in the buyer's mind as to the risks that the buyer might be taking on in purchasing the practice without adequate information. Where the premises are held under a lease, you will be dependant on the co-operation of the landlord and the landlord's solicitors in providing their consent to the transfer of the lease to the buyer of the practice. Dealing with these lease arrangements is the single biggest factor in determining how long it will take to go through the sale and purchase process where leased premises are involved. A transaction that might otherwise take between 4 and 8 weeks to complete might take twice as long or more if difficulties are encountered with the landlord or if the buyer does not have adequate references or, in the absence of references, is not able to provide a suitable guarantee or rent deposit. In order to minimise the issues that arise during the process of selling your practice, it makes good sense to speak with your solicitor about what lies ahead before the practice is put up for sale. You then have the opportunity to address any deficiencies in your current arrangements. A practice that is well run from an administrative point of view will inspire confidence in any potential purchaser.

Q: WHAT LEGAL ISSUES SHOULD I CONSIDER WHEN BUYING?

A: The short answer is that these issues are the same issues referred to in the previous question but viewed but viewed from a buyer's perspective. A buyer will want to find out as much relevant information as it can regarding the business the buyer wishes to purchase and this will involve the buyer's solicitor raising many standard questions regarding the business, its arrangements with clients and suppliers and its internal arrangements with staff and with the business owners. It will also involve looking in detail at any arrangements concerning the property including the terms of any lease or any legal rights and obligations that attach to the property. It is only through this "due diligence" process that a buyer will be able to make a truly informed decision about whether the practice is suitably risk free or to enable any risks that are identified to be contained and managed (perhaps through negotiation of appropriate provisions in the sale contract).

As explained in the preceding question, where the clinic premises are held under some form of lease then it will generally be necessary for the seller to obtain the consent of the landlord to the transfer of the remainder of the lease to the buyer. Inevitably, this will involve the buyer providing suitable references including, where possible, previous landlord references, professional references, trade references and bank references. Each landlord will have its own requirements but may typically require two or more references in order to be assured that the buyer is potentially a suitable tenant. Where inadequate references are provided then a landlord may require either personal guarantees (if the buyer is a limited company) or a rent deposit (e.g., six months rent) so that the landlord is protected if problems arise later. Alternatively, the landlord may refuse to gives its consent at all. One of the biggest single factors affecting the time that it takes to buy a practice is the time that the buyer takes to obtain satisfactory references. If it takes a month to obtain suitable references, then this is a month that is added to the purchase timescale. It is, therefore, important that the matter of references is dealt with at the earliest opportunity.

Of course, the buyer will also need to ensure that its finances are in place in good time or delays will occur.

Q: DO YOU HAVE CONTRACTS OF EMPLOYMENT?

A: Employment law is a fast changing area and it is important to keep employment contracts reasonably up to date to reflect or take account of changes in the law. Brightley Commercial are able to prepare contracts of employment and advise employees on employment contracts presented by employers.

Q: DO YOU HAVE ASSOCIATE CONTRACTS?

A: In many respects associate contracts are like contracts of employment but there are also some very important differences. First, an associate contract is generally a contract which leaves the associate still self-employed not an employee. Much employment law does not apply to such self-employed contracts and the responsibilities on the practice owners are less onerous provided that the contract is genuinely a contract for the provision of services rather than an employment contract merely labelled as a self-employed contract. Brightley Commercial are able to advise on and prepare such contracts.

Q: WHAT HAPPENS IF I HAVE A DISPUTE WITH AN EMPLOYEE?

A: Nowadays more so than ever before, the key to handling employment disputes correctly is to follow proper procedures. Indeed, failure to follow proper procedures can itself be grounds for an employee to claim compensation. Therefore "knee jerk reactions" by an employer can sometimes prove to be very expensive. The upside to this requirement is that, if procedures are correctly followed then an employer should be able to deal with a dispute without inviting any form of claim from the employee. Moreover, proper procedures are generally regarded as an opportunity for building good relations with employees so that all concerned have a clearer idea of what is expected of them. Therefore, when a dispute arises with an employee it is often sensible for an employer to take some preliminary legal advice at that stage so that they are properly briefed as to the correct procedures to follow.

Q: WHAT ARE THE LEGAL FEES INVOLVED WITH SELLING A PRACTICE?

A: Of course this is a difficult question to answer since no two transactions are exactly the same and the cost of legal help will depend on how simple or complex the transaction proves to be. However, taking a typical example of a clinic being sold for, £100,000 where there is the remainder of a lease to be transferred from the seller to the buyer, typical fees may be in the region of £2,000 - £3,000 plus VAT to cover preparation of the clinic sale agreement, preparing replies to questions submitted by the buyers solicitors and dealing with the landlord in obtaining the landlords consent to the assignment of the lease to the buyer. The sale of a business where no premises or employees are involved may well cost less. If the sale is actually the sale of the shares of a company that owns a clinic, then this is usually a more complex matter for a number of reasons and therefore, more expensive. As a result of this most clinic sales are sales of assets not shares.

Where the sale involves the transfer of a lease, a seller may also be liable to pay the landlord's solicitors costs for dealing with the giving of the landlord's consent to the transfer of the lease.

The better prepared the seller and the buyer are for the transaction (see questions for buyer and seller above) the smoother will be the process of dealing with the sale.

Q: HOW LONG DOES IT TAKE TO DEAL WITH THE LEGAL WORK INVOLVED IN THE SALE OF A PRACTICE?

A: The answer to this question draws heavily from the answers to the questions above. The sale of a clinic by a well organised seller to a similarly well organised buyer who has obtained good references at an early stage might be in the region of 4-8 weeks. Difficulties encountered and issues arising out of any aspect of the sale can complicate matters and cause delays. If bank borrowing is required by the buyer then this can also add to the timescale as the bank will have their own requirements to be met before they will release funds to the buyer. Good preparation and organisation is the key.