Purchase of optician business
Buying an optician business can be an exciting and stressful time. In our experience, even very similar looking businesses on paper can give rise to very different experiences for a buyer and seller. There are a number of factors to consider which we briefly look at below.
Legal issues when buying an optician business
Some of the legal issues to consider when buying an optician business are:
- Does the seller own the optical equipment, or is the equipment on hire purchase or lease terms? If you are buying, never assume all the equipment is owned outright especially if it looks modern and new. Always look at purchase receipts, and as appropriate you may need to discuss taking over the hire agreement.
- Has the seller of the optician business complied with his statutory obligations relating to the employees? E.g. do all employees have written employment contracts? The process to establish the seller’s compliance with employment laws is one part of the due diligence process.
- Are the locums of the optician business genuinely self-employed? We have seen situations where on completion of the purchase of an optician business, locums who were dismissed (but effectively had been working full time), bring an employment based claim for unfair dismissal.
- If you are intending on changing any employment terms or working practices of the employees this may be regarded as “measures” for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 2006. As such the existing staff would need to be consulted. Running a consultation can be an extensive (and expensive) exercise.
- If the target optician business conducts NHS work under a General Ophthalmic Services Contract, then how long will be required to get a new contract? What happens in the intervening period? Indeed will you be able to obtain a new contract without modifications to the practice premises? If so may you need a licence to alter from the landlord?
- There should be careful consideration that the purchase can provide a profitable return on investment. The report on the premises lease is therefore going to be a critical component in the financial viability of the optician business purchase. Indeed, if a bank is providing finance for the purchase of an optician business, then they may require a certain minimum length for the duration of the lease.
Legal stages when buying an optician business
The main legal and commercial stages when buying an optician business tend to include the following areas:
- The optician selling his business appoints an agent to find a buyer. There is an initial review of the optician business in order to provide marketing particulars.
- An interested buyer decides makes an offer to buy the optician business, and assuming accepted the selling agents will take the business off-the-market. Sometimes a deposit (which may or may not be refundable) is required to be paid to the agents.
- An exclusivity agreement may be put in place between the seller and buyer of the optician business.
- The accountant and solicitor acting for the buyer of the optometry business conduct due diligence to identify risks and liabilities. If significant liabilities are discovered then the buyer of the optometrist business may seek to negotiate a reduction to the purchase price, or ultimately walk away from the transaction. Typically the due diligence process can run from a few weeks to a number of months.
- The agreement to buy an optician business is prepared and negotiated. Typically this process can also take a few weeks to a number of months.
- The deal is completed.
Investigating the optician business
When buying an optician practice, the law will provide very few protections as standard. The old legal saying ‘buyer beware’ is still very relevant in this area of the law. Depending on the particular dynamics of the optician practice will depend on what pre purchase investigations should be made. This should be a dynamic process i.e. only areas likely to be relevant should be considered. There is nothing more irritating for a seller of an optician practice to have to do, then complete a string of irrelevant questions.
Legal advice for opticians and the role of the solicitor
Where we are appointed as the lawyer for opticians to act on the purchase of an optician business we have three key roles:
- First to investigate and report on the risks.
- Second, prepare and negotiate the sale and purchase agreement and other required transaction documents. The agreements should include warranty protection, non-compete restrictions and the treatment of work in progress.
- Attending to the completion of the purchase of the optician business itself.
Contact us
For more information please Spencer Laymond on (07974) 432579 or email at spencer@peterbrown-solicitors.com