10 Common Closing Documents Required to Sell Your Addiction Treatment Center - Addiction-Rep Addiction Treatment Center Common Closing Documents
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10 Common Closing Documents Required to Sell Your Addiction Treatment Center

Posted on Dec 12, 2023 by Jim Peake

Patient Brokering in Addiction Treatment Industry

When you are selling your addiction treatment center there are a few key steps involved in the process. As the transaction progresses the anticipation of ‘closing’ the deal can be exciting. It can also prove to be a lengthy process with many boxes to be checked prior to any money exchanging hands. To better help you prepare for this we have compiled a list of 10 key documents that you are likely required to provide during this time. This list is an example and will vary for each transaction depending on variables such as local/state regulations, terms of the sale and the nature and structure of your business entity. We recommend you consult with legal and financial professionals during this phase to ensure all necessary documents are prepared timely and accurately. 

Here are ten of the most common documents you will need prior to the closing:

Non-Disclosure Agreement (NDA): When Due Diligence is being conducted as part of the sale procedure, a lot of sensitive and private information is exchanged between parties (seller and buyer). An NDA agreement (Mutual) is necessary to ensure that both parties respect the confidentiality of information they are receiving both during and after the completion of the sale.

Letter of Intent (LOI): An LOI is the initial document confirming the Buyer’s ‘intent’ to purchase the addiction treatment center. In this agreement the buyer will state the main terms and conditions of the sale. They will state the (contingent) purchase price, the structure of the payment(s) and outline any other conditions.

Due Diligence Checklist and Documents: This is a full list of the documents and information that the seller will need to provide to the buyer so that they can fully assess the performance of your addiction treatment center.  This list will include financial statements, licenses, lease agreements, vendor contracts, Insurance contracts, employee information, and more.

Financial Statements: The most recent and accurate financial statements of the business, including balance sheets, income statements, and cash flow statements.

Tax Records: The previous two or three years’ tax returns will be required to confirm the financial history of the business. In addition, personal tax returns might also be requested.

Licenses and Permits: Documents that are required to legally operate the addiction treatment center will be requested. These can include State Licenses (such as Detox, Residential, PHP, IOP, OP), Employee Licenses and certifications, and permits.

Real Estate Documentation of Lease Agreement: Documents relating to the premises where the business is conducted will be required. This will be real estate documents if a property is being sold with the business or a lease agreement if the premises are leased.

Employee Information: Details regarding employee roles, pay & benefits, Employment contracts and any other relevant employee information will be requested.

Asset Purchase Agreement (APA) or Share Purchase Agreement (SPA): In an APA, the terms agreed to in the LOI (letter of intent) are elaborated on to provide more detail. The purchase price, terms of the sale, any assets or shares that are being transferred, any warranties, representations and other relevant conditions are all provided so that both parties are fully informed of the requirements of the transaction. In instances of a simple asset sale, a long-form bill of sale might be used instead.

Bill of Sale: If the sale involves tangible assets like equipment, furniture, or inventory, a bill of sale is used to transfer ownership of these assets from the seller to the buyer.

This is by no means the entire list. Some additional items required might be specific to the State where the business is located. Your accountant and other experienced business finance professionals can guide you through the process and also hiring a legal consultant should increase the likelihood of a smooth sale process.

Jim Peake

Jim Peake – Jim has over 30 years of direct response advertising marketing experience. He was the catalyst for putting the Internet in the front page of every newspaper around the world for the first time with the chess event Grandmaster Garry Kasparov vs. IBM’s Deep Blue super computer in the mid 1990’s. Jim’s main area of focus today is helping drug and alcohol treatment centers market their businesses in a hyper competitive market.

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