Legal Aspects of GP Practice Mergers
For those readers that are considering a merger and are wondering what exactly is involved, an overview of the five key stages is set out below.
Once you have moved passed initial discussions with another practice, the first stage is to agree head of terms. Heads of terms are a non-legally binding summary of the terms of the proposed merger, such as what assets are going to be transferred by each party, how those assets will be valued and any conditions to the merger.
The second stage is due diligence. This is a two-way process that enables the parties to understand their future partners’ viability and standing (as each practice will have its own clinical and trading history and its own contracts, employees, liabilities and issues). Due diligence is split into three parts: legal, financial and commercial. The process can be arduous and document heavy but by undertaking due diligence and identifying any risks associated with the merger, each practice will be able to make an informed decision about whether to proceed.
The third stage is notifying NHS England of the proposed merger and obtaining its approval. It is highly advisable to involve NHS England in the process at an early stage. The type of notification, approval or variation required will depend on the type of clinical contract(s) held by the merging practices.
The fourth stage is the agreement of the legal documents for the new, merged practice. This will include a new partnership agreement for the merged practice (or a deed of adherence and variation to an existing partnership agreement), leases of the practice premises and asset transfer agreements to transfer the non-property assets of the individual practices into the new, merged practice.
The fifth and final stage is implementation of the new management structures and practices. This stage is the most important stage and yet it is the one that is most easily forgotten in the lull after completion. It is important that partners have a clear plan for any changes they wish to make post-merger as changes are most likely to be successfully implemented during the first 90 days. Completion of a merger is in many respects the beginning and not the end of the process!
For further information please contact Matthew Simmonds, a partner at Brachers LLP, at firstname.lastname@example.org.