Description

Practically every seller in a healthcare transaction will have a government permit that requires some action by the buyer with the applicable government agency. A permit is a license, certificate of need, provider number, approval, registration, order, certification, or some other authorization issued by an agency and required for the operation of a healthcare business.

In a healthcare transaction, major issues involving permits may arise. Therefore, to mitigate the risk of permit-related problems in the deal, counsel for buyers and sellers should be aware of how to address those issues when structuring the transaction including providing for sufficient executory periods, creating representations, warranties, and covenants that best protect their clients interests, and building in a potential process extension or breakup fees where the necessary permitting requirements do not occur within the prescribed period.

For example, most healthcare transactions require an executory period between signing and closing to enable the parties to fulfill certain permit transfer, approval, or notice obligations. Generally, sellers would like shorter executory periods while buyers want as much time as possible to ensure the permit transfer. The duration of the executory period settled on by the parties will depend on several factors including the type and quantity of permits transferred, the agency process involved, and whether the transaction is an asset or equity deal. Counsel for the parties should understand what factors may impact a specific deal to build a sufficient executory period into the transaction and how to deal with potential delays including allowing for an extension period or building in breakup fees.

Listen as our expert panel addresses major government permit-related issues in healthcare transactions and how to help clients, whether buyers or sellers, navigate those pitfalls when structuring a healthcare transaction.