CHAPTER 7

Exit Transactions: The Process of Selling an Urgent Care Company

Adam Winger

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CHAPTER 7

Exit Transactions: The Process of Selling an Urgent Care Company

Adam Winger

ALL GOOD INVESTMENTS MUST come to an end. Options for exiting an investment in an urgent care company include transitioning the business to younger generations in the owner’s family, selling the company’s equity or assets to one or more third parties, or simply ceasing all business operations.

Over the past several years, the exit strategy of choice in the urgent care industry has been the sale to outside investors. This is not surprising in light of the elevated purchase prices that have resulted from the investment interest of private equity investors, hospital systems, and insurance companies.

Although the potential to receive retirement-type money is appealing, the prospect of ending your relationship with a company that has consumed years (and potentially decades) of your life can be both overwhelming and emotional. Further complicating the process of selling your own company in the urgent care context are the many unique regulatory challenges to be overcome to transfer ownership of the business.

This chapter introduces a variety of these challenges. Specifically, it addresses issues relating to transaction structuring, tax, and liability of the seller after the conclusion of the sale. Although the process of selling a business is never without stress, planning for these issues will lead to a smooth transaction that benefits both seller and buyer.

TRANSACTION MECHANICS

Before delving into the various substantive aspects of an urgent care transaction, it may be helpful to provide a bit of context for the discussion. Nearly all urgent care transactions involve the following chronology:

Execution of a confidentiality and nondisclosure agreement

Completion of preliminary due diligence by the buyer

Negotiation and execution of a letter of intent

Completion of further diligence by the buyer

Negotiation and execution of a purchase agreement and various ancillary agreements

Closing of the transaction

Confidentiality and Nondisclosure Agreement

Before an urgent care seller turns over any confidential information concerning the business, it will generally require that the buyer enter into a confidentiality and nondisclosure agreement. These agreements are frequently referred to as CAs or NDAs.

As their