Broker Tip – Payoffs For Vendor Service Contracts

A seller must be aware, if thinking about selling their practice, that in a sale, a buyer expects and usually demands that the seller will pay off all debt and equipment leases and any service contracts held for any vendor supplying any equipment. These vendor service contracts are usually for five years. We have seen cases where sellers pay off balances from these vendors as high as $250,000 or more. A colleague consultant had a seller doctor with a payoff settlement to a vendor of $800,000. Please do not sign service contracts within three to five years of a practice sale.

Tip by Dr. Karl Salzsieder (DVM, JD, CVA) with Total Practice Solutions Group’s Northwest Territory.

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