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What Happens to Accounts Receivable and Accounts Payable with the Sale of a Hearing Care Practice?

Craig A. Castelli

August 31, 2015

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Question

What usually happens with accounts receivable and accounts payable in the sale of a hearing care practice?

Answer

Craig Castelli: Typically, there is an account cut-off at closing.  The seller basically owns both the accounts receivable and accounts payable.  The seller is responsible for paying all the bills and the seller has the right to collect all of the receivables.  In the purchase agreement, you will draw up a schedule to itemize every receivable and payable so it is clear in the legal document what the seller’s responsibility is.  As those payments come in, there are two ways to handle it.  You can either have those payments directed to a bank account that the seller owns, or you would be a true-up after a 90-day period.  You would figure out after the first 90 days after the sale, what does the buyer owe the seller and what does the seller owe the buyer for all the little things that have come up? 

This Ask the Expert was taken from the course, Advanced Transaction Strategies, by Craig Castelli and Ron Gleitman, presented in partnership with the Academy of Doctors of Audiology.


craig a castelli

Craig A. Castelli

Founder, Caber Hill Advisors

Craig Castelli is the Founder of Caber Hill Advisors and serves as the company's CEO.  He has over 10 years of audiology industry experience and has worked with hundreds of private practices.  He launched Caber Hill because he wanted to transform the business brokerage industry by bringing a higher level of service and professionalism that would produce above average results for his clients.  Caber Hill was formerly the Chicago office of Bridge Ventures, which Mr. Castelli founded in 2010 and rebranded as Caber Hill at the end of 2013. 

At Caber Hill, our mission is simple: to share our expertise with current and future business owners who want to buy, sell, or grow a private practice.  Contact Craig at craig@caberhill.com.


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