The seller who accepts the acquisition of an asset may not be obliged to forego all the capital gains that are normally granted to him in connection with a share sale. A fair distribution of the purchase price between “hard” assets (i.e. equipment, facilities) of goodwill and restrictive agreements can lead the seller to achieve more favourable tax treatment than in the case of a right asset agreement. A good accountant should be able to obtain an advantageous allocation of purchase prices, but the seller should be informed that any allocation would have to be grounded in reality to succeed with the Internal Revenue Service. Regardless of the above, a buyer may benefit from a share purchase. In the case of an equity agreement, existing contractual agreements with the portfolio can be transferred to the new shareholder. Thus, an acquirer of the existence of a medical practice may become a provider under managed care contracts that he would not otherwise have been able to acquire because a particular panel can be concluded. If the buyer had acquired the assets of the same practice, the buyer would have to ask for all his supplier numbers and wait up to 18 months before they were acquired. Of course, with supplier numbers comes the potential for liability, so if the seller participated in fraudulent activities before the sale, the buyer may be involved in an investigation or even a dispute with acts he did not commit. How a merger is taxed depends on its structure.
In general, triangular mergers in advance and in advance are taxed as asset purchases, while reverse triangular mergers are taxed as share purchases. In addition, buyers generally benefit from better tax treatment when buying assets as opposed to equities. Buyers can also reduce their taxable profit or increase their loss if they sell or sell the assets later. An inverted triangular fusion resembles a triangular merger at the front, except that the target practice is the surviving unit and not the 100% subsidiary of the buyer. Of course, medical practice transactions can be complicated. It is therefore essential that physicians have an experienced and competent team, consisting of an advisor, an accountant and a lawyer, who will help you check all your options and choose the one that will ensure the continued success of your practice. One way to protect yourself and make the most educated decisions about whether to buy the stock or assets of a practice is due diligence. This means hiring a lawyer and accountant to search public records, verify the seller`s equipment contracts and analyze the seller`s financial data. Due Diligence, which is performed correctly, can prevent a buyer from making costly business mistakes. When deciding to proceed with an asset or share transaction to purchase a medical practice, the buyer and seller must consider the facts in their particular situation. To protect a buyer from debt, the preferred method is to book assets rather than buy shares.