Blog

By Sofia Fadra

There are many advantages to practice – economies of scale, knowledge and skills pooling, and improved quality of care for patients. There are also many aspects that you must consider from a legal standpoint.

1) What structure will the practice merger take?
A practice merger will usually occur in one of two ways i.e. the merger of practices to form a merged partnership, or the takeover of one practice by another. It is important that both practices are clear on the structure of the merger from the outset to avoid obstacles arising further down the line.

You will need to consider how the merged practices will operate in partnership together. The partners of the merged partnership will be jointly and severally liable, so careful consideration should be taken when deciding on how you will work together.

To give the practices sufficient time to plan for the merger we would recommend starting the process nine to 12 months before you intend to merge. We also recommend seeking financial and tax advice so that the practices can ensure that they are happy with the financial consequences of the merger.

2) Do we need to carry out due diligence?
It is important to conduct full legal and financial due diligence on the practice(s) that you are merging with. Conducting due diligence can help to uncover any potential obstacles, such as onerous contracts or potential liabilities. It can also help practices who are intending to merge have informed discussions regarding any liabilities/obligations, or whether one practice will indemnify the other in relation to those liabilities/obligations. If any liabilities appear to be particularly onerous, the practice may choose to include indemnities and warranties in the business transfer agreement to protect the practice.

3) Do we need to approach the ICB regarding the merger?
Yes, however your approach will be dependent on whether the practices hold a GMS contracts, PMS agreements or APMS agreement. NHS England consent may be required and as such we recommend starting discussions with your ICB as early as possible.

4) What do we need to consider in relation to the property?
This will depend on whether the merged partnership will operate from their original practice’s premises or if they will be moving to a new building. If the merged partnership is continuing to operate form the premises our advice will depend on if the practices own their premises or if they are leased. If the practices own their premises, you will need to consider whether the other partners are willing to buy into a share of the other partners’ premises. If the premises are leased, the practices will want to ensure that all the partners have joint and several liability for the obligations of the tenant under the lease. If you are moving to a new building, you will need to agree to terms on which you will occupy the new premises.

5) How do we deal with the transfer of employees?
A practice merger usually results in the transfer of employees under the TUPE Regulations. If this occurs the merging practices need to ensure that they comply with their obligations under the TUPE regulations, for example the duty to inform and consult with the employees and the duty to provide employee liability information.

Sometimes practice mergers may result in the duplication of staff and expertise. If this occurs the practices will need to consider the implications of the merger for the workforce and how they intend to deal with these. We recommend seeking legal advice on your TUPE obligations.

6) What legal work do we need to carry out?
As part of the merger, you will usually transfer the assets, equipment, staff etc. to the merged partnership. The terms of the transfer will be dealt with in a business transfer agreement. This will include a various indemnities and warranties from each practice indemnifying the other practice in relation to any losses and liabilities relating to the period prior to the merger. It will also document your obligations under TUPE in relation to the transfer of your employees.

Depending on the structure of the merger you may need to amend your partnership deed, enter into a short-term partnership deed and/or deed of retirement if any partners are not staying on following the merger.

How can BMA Law help?
BMA Law has specialist expertise in advising on practice mergers and takeovers. We can assist with all stages of the process, from advising on your GMS contract, PMS Agreement and/or APMS agreement, to drafting the legal documents and assisting with your property arrangements.

Get in touch

For advice on GP mergers, takeovers, and other related matters please contact Sofia Fadra on 0300 123 2014 or email info@bmalaw.co.uk.