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Your Dental Lawyer After the Deal Closes

By October 10, 2013June 27th, 2023Michael's Operatory

I just realized that part of what we do involves helping dentists transition into or out of a practice. Buyers transition in. Sellers transition out. And we give lots of valuable advice to dentists on things like what happens to staff (for the purchaser), getting your Wills and Powers of Attorney in order, maintaining your corporate minute book (for the purchaser), what to do with all the money you’ve received from selling your practice (for the seller), etc.

We are there to help you with whatever you need from a legal perspective. Let’s take a look at some examples, shall we?


So typically, a purchaser will take on employees “as is” – meaning they haven’t been terminated, given notice or paid out (in lieu of notice) prior to the closing. This means that the purchaser will inherit all the employee-related liabilities (and pent-up notice) for the pre-closing time. So if an employee has been with the vendor for 20 years, that means that the purchaser will typically acquire a 20-year employee. At first glance, this may look bad for the purchaser. Sure, the vendor may have agreed to assume some or all of the termination costs after the closing for a set period of time (e.g. 3 months, 6 months, etc.), but the reality is that the purchaser NEEDS this person (typically, front desk staff). So the purchaser can’t get rid of them unless they absolutely have to because of something bad (e.g. fraud, theft, incompetence, etc.).

So, where does that leave the purchaser after the closing? Well, we generally recommend that the purchaser provide their newly acquired staff with notice and then present them with a new employment agreement to sign after the notice period expires. The notice period will depend on the length of time the staff have been there. Under the employment standards act, it’s up to a maximum of 8 weeks. Under the common law (i.e. judge-made law), it could be a number of months. It will depend on things like what their existing employment agreement says (if anything), how long they’ve been with all previous employers, their ability to find work elsewhere, their position, etc. Make sure to speak with a lawyer about these factors.

So you see: providing notice and getting staff on new contracts is just one post-closing transition task that we can assist with.

Wills and Powers of Attorney

All of a sudden, the vendor has a whole whack of cash. They sold their practice (by the way, now is a great time to sell if you’re a vendor). And they’re talking with a financial advisor. And the advisor tells them to make sure they get their Wills and Powers of Attorney up to date. This way, they can specify how they want their assets (e.g. cash, property, securities, etc.) to be distributed when they die. They should also have a Power of Attorney for Personal Care and a Continuing Power of Attorney for Property so that someone else can make decisions on their behalf in the event of incapacitation.

As for the purchaser, well, they just bought a very expensive asset. And they should have their Wills in place to save on estate administration taxes (assuming they purchased the practice with a dentistry professional corporation). They should also have Powers of Attorney in place so that, in the event they become incapacitated, someone can step in and make decisions about their health care/finances/property so that the practice doesn’t suffer as a result. This will also help avoid legal disputes.

Maintaining Corporate Minute Book

Typically, the purchaser will have a professional corporation buy the shares or assets of a dentistry professional corporation. This is done to limit liability and also to make it easier to repay any loans (because corporate purchasers are taxed less and therefore have more money to repay a loan and can thus do it quicker than a purchaser who is a human being). Now, after the closing, there’s some clean-up work that needs to be done. For example, in share sales, the purchaser will need to amalgamate his dentistry professional corporation with the vendor’s and get a new Certificate of Authorization from the College (lots of paperwork goes into this!). Documents also need to be filed with the Ontario government (resignations of officers and directors), and the corporate minute book needs to be updated to reflect new officers and directors. Finally, on an annual basis, the corporation’s minutes need to be maintained so as to comply with Ontario government rules.

Bulk Sales Act compliance

When purchasing assets, the purchaser will typically want the vendor to comply with the Bulk Sales Act so that the vendor’s creditors won’t be able to go after the purchaser for outstanding amounts owed to them. We discuss the Bulk Sales Act at length in this blog in the context of dentists purchasing assets from other dentists or dentistry professional corporations. Sufficed to say, after the closing, the purchaser’s lawyer will need to file documents (affidavit + seller’s statement as to creditors) and pay a court fee within a very short period of time at the correct court house (i.e. 5 business days). This is done so that the Bulk Sales Act has been complied with.

Now, if the vendor had outstanding creditors on the day of the sale but promised to pay them out from the proceeds, then the purchaser’s lawyer will want to follow up and receive evidence of releases/discharges (i.e. the creditors acknowledging that they are no longer owed anything). This is to ensure that the purchaser bought their assets free and clear of all charges.

Closing Financial Statements

Typically, in a share sale, the vendor will promise to get an accountant to prepare closing financial statements and deliver them within 90 days of the closing have taken place. These closing financial statements will include a balance sheet and income statement. The purchaser must agree with these financials before they can be filed with the government. The vendor will also agree to pay any outstanding taxes owed. In addition to the closing financial statements, the parties may include adjustments that were taken into account only after the fact, such as pre-paid expenses (i.e. the vendor paid for these things prior to the closing) like rent, software licenses, staff, etc.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.