Buying or Selling a Medical Practice in Ontario: A Legal Guide for Physicians

Buying or selling a medical practice in Ontario is not the same as buying or selling an ordinary small business.

A medical practice can involve a professional corporation, physicians and other regulated professionals, patient records, privacy obligations, OHIP-related operations, employees and independent contractors, commercial premises, equipment, an EMR system, goodwill, and continuing professional obligations to patients.

I’m Raz Toor, the founder of Falcon Law PC. We regularly work with physicians, healthcare clinics and other regulated healthcare businesses on corporate structuring, commercial agreements, clinic leases, workforce arrangements and business transactions. In a practice acquisition, those issues tend to converge in a single file.

For that reason, I generally approach a medical-practice transaction in two layers: first, the ordinary business acquisition issues; and second, the healthcare-specific issues that determine whether the structure actually works for a physician practice.

What Exactly Is Being Bought or Sold?

The phrase “medical practice” can describe very different businesses.

A transaction might involve:

• a family medicine practice;
• a walk-in clinic;
• a specialist practice;
• a multidisciplinary medical clinic;
• a physician professional corporation;
• a clinic management business;
• a medical or cosmetic clinic;
• medical equipment and leasehold improvements;
• administrative infrastructure;
• employees and contractors;
• a commercial lease;
• an EMR platform;
• branding, websites and telephone numbers;
• professional goodwill; and
• arrangements concerning patient records.

Before discussing price or drafting a purchase agreement, I would first determine what the seller actually owns and what can legally be transferred.

Asset Purchase or Share Purchase?

One of the first decisions in a medical-practice acquisition is whether the transaction will be structured as an asset purchase or a share purchase.

Asset Purchase

In an asset purchase, the buyer purchases specified assets from the seller.

Those assets may include:

• medical and office equipment;
• furniture;
• leasehold improvements;
• inventory and supplies;
• trade names and branding;
• websites and domains;
• telephone numbers;
• certain assignable contracts;
• goodwill; and
• other operational assets of the clinic.

An asset transaction can allow the purchaser to be more selective about which assets and contractual obligations it assumes.

However, the buyer should not assume that an asset purchase automatically eliminates every historical liability. Employment legislation, tax matters, privacy obligations, contractual assumptions and other statutory liabilities still need to be considered.

Share Purchase

In a share purchase, the purchaser buys the shares of the corporation that owns or operates the practice.

The corporation itself continues after closing. Its contracts, employees, liabilities, tax history, corporate records, lease obligations and other legal relationships generally remain with it.

That can provide continuity, but it also means the buyer is acquiring the corporation’s history.

A share purchase therefore generally requires careful legal, corporate, financial and tax due diligence.

For a broader comparison, see our guide to asset purchases versus share purchases in Ontario.

Professional Corporations Require Special Attention

A physician professional corporation is not an ordinary Ontario corporation.

Ontario law imposes specific ownership requirements on physician corporations. Among other things, voting shares of a physician corporation must be legally and beneficially owned, directly or indirectly, by a member of the College of Physicians and Surgeons of Ontario.

That means a purchaser cannot assume that the shares of a physician professional corporation can be transferred to any ordinary corporation, investor or non-physician purchaser.

The transaction may instead need to distinguish between:

• the physician professional corporation;
• the clinic’s operating assets;
• a separate management corporation;
• real estate or lease interests;
• equipment;
• administrative staff;
• branding and intellectual property; and
• other non-clinical business assets.

This is one of the reasons I would establish the corporate structure early rather than simply using a generic business-purchase agreement.

The Buyer Should Review the Corporate Records

If a corporation is being acquired, legal due diligence should include its corporate history.

Depending on the structure, that can include reviewing:

• articles of incorporation;
• articles of amendment;
• share registers;
• share certificates;
• director and officer registers;
• shareholder resolutions;
• director resolutions;
• shareholder agreements;
• corporate reorganizations;
• professional-corporation authorizations; and
• other minute-book records.

Where the seller tells the buyer that it is acquiring a particular corporation, I want to confirm who actually owns it, what securities are outstanding and whether the corporate records support the proposed transaction.

Patient Records Are Not Ordinary Business Assets

This is one of the most important differences between a healthcare transaction and an ordinary business sale.

Patient medical records should not simply be listed in a purchase agreement as though they were office furniture or inventory.

Physicians and other health information custodians have continuing obligations under Ontario’s Personal Health Information Protection Act, 2004 (PHIPA), as well as professional obligations relating to custody, access, retention, privacy, security and continuity of care.

PHIPA specifically addresses potential successors and successor custodians.

For example, a health information custodian may disclose personal health information to a potential successor for the purpose of evaluating the operations, provided the potential successor first agrees to keep the information confidential and secure and not retain it longer than necessary for the evaluation.

PHIPA also permits records to be transferred to a successor custodian where the statutory requirements are followed, including reasonable efforts to notify the affected individuals.

Who Will Be the Health Information Custodian After Closing?

That question should be answered before the sale closes.

The transaction documents may need to establish:

• who currently has custody or control of patient records;
• who will have custody or control after closing;
• how the EMR will be accessed;
• whether the purchaser is legally capable of becoming the successor custodian;
• how patient notice will be handled;
• what happens if a patient does not continue with the purchaser;
• how former physicians retain necessary access;
• how records will be retained and secured; and
• what happens to records relating to physicians who leave the practice.

The College of Physicians and Surgeons of Ontario also requires physicians practising in shared-record environments or where they do not own the practice or EMR licence to have written arrangements establishing custodianship and clear accountabilities for medical records.

That makes records documentation part of the transaction itself rather than an administrative issue to be sorted out afterward.

The Commercial Lease Can Determine Whether the Practice Is Transferable

A medical practice may derive substantial value from its location.

The clinic may have been operating from the premises for years. Patients know the location, expensive medical improvements have been installed, and relocation may be disruptive.

The buyer should therefore review the commercial lease early.

Important issues can include:

• remaining lease term;
• renewal options;
• assignment rights;
• change-of-control provisions;
• landlord consent requirements;
• permitted medical uses;
• exclusivity rights;
• base rent;
• additional rent;
• personal guarantees;
• signage rights;
• parking;
• accessibility;
• medical build-out obligations;
• HVAC and building services;
• bio-medical waste requirements;
• restoration obligations; and
• relocation or demolition provisions.

An asset purchase may require an assignment of the lease or a new lease with the purchaser.

A share purchase may not change the named tenant, but the lease can still contain a change-of-control provision requiring landlord approval.

You can read more about our Ontario commercial lease legal services.

Review the Physicians Working at the Clinic

The value of a medical practice can depend heavily on whether physicians and other healthcare professionals remain after closing.

A buyer should understand whether the clinic’s physicians are:

• shareholders;
• employees;
• independent contractors;
• associates;
• locums;
• subtenants;
• parties to cost-sharing arrangements; or
• working under some other contractual structure.

The buyer should then review the applicable agreements to determine whether they continue after closing and whether any consents are required.

The fact that a physician currently works at the clinic does not necessarily mean that physician is obligated to remain after the business changes ownership.

Employees and Administrative Staff Need Their Own Review

Medical practices commonly employ receptionists, administrators, billing staff, clinic managers and other non-clinical personnel.

In an asset purchase, the parties need to determine which employees will be offered continued employment and how employment liabilities will be allocated.

Ontario’s employment legislation can recognize continuity of employment following the sale of a business, so a purchaser should not simply assume that an employee’s prior years of service disappear when ownership changes.

In a share purchase, the employing corporation generally remains the same legal entity, which means the employment relationships ordinarily continue through closing.

Independent Contractor Arrangements Should Be Reviewed Carefully

Healthcare practices frequently use independent-contractor arrangements with regulated professionals.

The purchaser should understand:

• which professionals are contractors;
• what services they provide;
• how compensation is calculated;
• whether fees are collected by the clinic;
• termination rights;
• notice requirements;
• restrictive covenants;
• record-access provisions;
• privacy responsibilities;
• insurance requirements; and
• whether the arrangement complies with applicable professional obligations.

A buyer purchasing a clinic with a large contractor workforce should not assume that all of those relationships automatically transfer with the business.

Review the Clinic’s Management Structure

Some medical practices separate professional activities from non-clinical business operations.

A physician professional corporation may provide professional medical services while another corporation holds or manages assets such as:

• the lease;
• administrative staff;
• equipment;
• marketing;
• technology;
• billing support;
• office infrastructure; and
• other management functions.

Where a management corporation is involved, the buyer needs to understand exactly which entity owns each asset and which agreements govern the relationship between the entities.

This becomes especially important where non-physician investors or owners are involved in the business side of the clinic.

Clinical Decision-Making Should Remain With Regulated Professionals

Buying a clinic does not give a purchaser the ability to control professional judgment simply because the purchaser owns business assets or a management company.

The transaction structure should preserve the authority of regulated professionals over matters requiring independent clinical judgment.

This can affect:

• management agreements;
• medical director arrangements;
• fee structures;
• professional staffing;
• medical directives;
• patient-care decisions;
• record access; and
• other aspects of clinic governance.

This is particularly relevant in multidisciplinary clinics, medical spas, investor-backed clinics and businesses where clinical and non-clinical ownership are separated.

Review Privacy and PHIPA Compliance

A purchaser should understand the clinic’s privacy framework before inheriting its operational systems.

Due diligence can include reviewing:

• privacy policies;
• patient consent processes;
• EMR arrangements;
• health information custodian roles;
• privacy officer responsibilities;
• third-party service providers;
• cloud-storage arrangements;
• remote access;
• privacy breaches;
• complaints;
• record-retention practices; and
• contracts with service providers handling personal health information.

Privacy deficiencies discovered after closing can become the purchaser’s operational problem very quickly.

Medical Equipment Should Be Verified

The purchaser should confirm which equipment is actually owned by the seller.

Some equipment may be:

• leased;
• financed;
• subject to PPSA security;
• rented;
• owned by an associate physician;
• owned by a management company; or
• subject to service or maintenance agreements.

The purchase agreement should clearly identify the equipment included in the sale and require appropriate discharges of security interests where applicable.

For valuable medical equipment, the purchaser may also want maintenance history, warranties and confirmation of operational condition.

What About Goodwill?

Medical-practice transactions commonly allocate value to goodwill, but goodwill in a professional practice requires careful treatment.

The buyer may be paying for factors such as:

• an established location;
• clinic branding;
• administrative infrastructure;
• staff;
• physician relationships;
• telephone numbers;
• web presence;
• systems and processes;
• community reputation; and
• the opportunity to continue an established practice.

However, patients are not property.

A seller cannot guarantee that patients will remain with the purchaser, and the transaction should not treat patients as commodities that can simply be bought and sold.

Continuity of care, patient choice and privacy obligations remain important throughout the transition.

Restrictive Covenants Require Careful Drafting

A purchaser may understandably want protection against paying for goodwill only to have the selling physician immediately establish a competing practice nearby.

The purchase agreement may therefore include non-competition, non-solicitation and transition provisions.

Those provisions should be carefully drafted for the actual transaction and considered in light of applicable law and professional obligations.

Relevant considerations can include:

• geographic area;
• duration;
• type of practice;
• patient choice;
• continuity of care;
• referral relationships;
• staff solicitation; and
• the seller’s post-closing involvement.

Will the Seller Stay During a Transition Period?

Some acquisitions work better where the selling physician remains for a defined transition period.

This can help with:

• introducing the purchaser;
• maintaining continuity;
• transitioning administrative processes;
• training staff;
• dealing with referral relationships;
• understanding billing and clinic systems; and
• reducing operational disruption.

If the seller will remain involved, the parties should document the arrangement rather than relying on an informal promise to “help for a few months.”

The agreement should address duties, compensation, hours, duration, termination, professional responsibilities and liability.

The Purchase Price May Need Adjustments

Medical-practice transactions can involve closing adjustments for items such as:

• rent;
• prepaid expenses;
• employee obligations;
• equipment leases;
• inventory;
• accounts payable;
• deposits;
• service contracts;
• utilities; and
• other expenses spanning the closing date.

The buyer’s accountant should also be involved early in determining purchase-price allocation and tax structure.

A transaction structure that is legally possible may not be the most tax-efficient structure for either party.

Due Diligence Should Go Beyond the Financial Statements

Financial performance is obviously important, but legal due diligence asks different questions.

Depending on the practice, I would consider reviewing:

• corporate records;
• professional-corporation documentation;
• commercial leases;
• associate agreements;
• employment agreements;
• independent-contractor agreements;
• management agreements;
• medical director agreements;
• equipment leases;
• PPSA registrations;
• bank security;
• material service contracts;
• EMR contracts;
• privacy policies;
• insurance;
• regulatory issues;
• litigation or claims;
• workplace matters;
• licences and permits; and
• other obligations that will affect the purchaser after closing.

Legal due diligence should ultimately answer a straightforward question: what exactly is the buyer acquiring, and what liabilities or obligations come with it?

The Letter of Intent Matters

Before the definitive purchase agreement is negotiated, the parties often sign a letter of intent or term sheet.

That document may address:

• purchase price;
• asset versus share structure;
• deposit;
• due diligence period;
• financing;
• closing date;
• exclusivity;
• confidentiality;
• lease assignment;
• transition assistance;
• restrictive covenants; and
• other major business terms.

I generally recommend obtaining legal and accounting input before the LOI becomes too detailed. It is much easier to structure the transaction properly at the beginning than to renegotiate fundamental terms after everyone believes the deal has already been agreed upon.

The Purchase Agreement Should Address Healthcare-Specific Closing Conditions

A medical-practice purchase agreement may need conditions that would not appear in a generic business acquisition.

Depending on the transaction, conditions can include:

• satisfactory legal due diligence;
• satisfactory financial and tax due diligence;
• landlord consent;
• financing approval;
• appropriate professional-corporation arrangements;
• transition of health information custodianship;
• EMR arrangements;
• continuation or replacement of associate agreements;
• regulatory approvals where required;
• discharge of liens and security interests;
• assignment of material contracts;
• insurance;
• employee transition arrangements; and
• other clinic-specific requirements.

What Should a Seller Be Thinking About?

A physician selling a practice should focus not only on receiving the purchase price but also on achieving a clean and professionally responsible transition.

That can include:

• determining exactly what is being sold;
• organizing corporate records;
• addressing deficiencies in the minute book;
• reviewing the lease;
• obtaining landlord consent;
• identifying equipment ownership;
• dealing with bank security;
• reviewing employee and associate arrangements;
• planning patient notification;
• addressing record custodianship;
• negotiating any transition period;
• obtaining releases from guarantees where possible;
• working with the seller’s accountant on tax planning; and
• ensuring ongoing professional obligations are satisfied.

What Should a Buyer Be Thinking About?

A purchaser should be asking whether the practice it believes it is buying will actually exist in substantially the same form after closing.

That means understanding whether:

• the physicians will stay;
• the employees will stay;
• the premises will remain available;
• the buyer can use the existing branding;
• the buyer can access the necessary systems;
• the equipment is owned and transferable;
• the clinic’s contracts will continue;
• records can be transitioned lawfully;
• the corporate structure is compliant;
• there are undisclosed liabilities;
• the seller will provide transition assistance; and
• the economics still make sense after all required changes.

What We Have Been Working On in Healthcare Transactions in 2026

Our recent healthcare work illustrates why these transactions need to be approached as both business deals and healthcare matters.

In one current Ontario transaction, we have been acting for the purchaser of an operating pharmacy in an approximately $560,000 asset acquisition. Our due diligence has included equipment and fixed assets, inventory, employees, material contracts, security interests, supplier arrangements and the operational agreements required for the purchaser to continue the healthcare business after closing.

That transaction also involves a commercial occupancy structure, requiring the business acquisition to be coordinated with the existing lease documentation and the arrangements governing continued operation from the premises.

In another 2026 healthcare matter, we reviewed and negotiated substantial commercial lease documentation for a new clinic location. The lease raised issues including medical use restrictions, build-out obligations, insurance, bio-medical waste, HVAC and building systems, operating costs and other commitments that could materially affect the clinic over the life of the lease.

We also regularly advise healthcare businesses on associate, employee and independent-contractor structures, privacy arrangements, management relationships and professional-governance issues. Those arrangements become particularly important during an acquisition because the purchaser needs to understand which relationships will survive closing and which need to be replaced or renegotiated.

The recurring lesson is that buying a healthcare business is rarely only about the purchase agreement. The corporation, professionals, workforce, premises, patient information and regulatory structure all have to work together after closing.

The examples above have been anonymized and certain transaction values and details have been generalized or rounded to protect client confidentiality.

Do You Need a Lawyer to Buy or Sell a Medical Practice?

Given the combination of business-acquisition law, healthcare regulation, professional-corporation rules, privacy obligations, contracts and commercial leasing, I would strongly recommend legal advice before committing to the transaction.

The lawyer’s role can include:

• reviewing or negotiating the letter of intent;
• advising on asset versus share structure;
• conducting legal due diligence;
• reviewing the professional-corporation structure;
• drafting or negotiating the purchase agreement;
• reviewing the commercial lease;
• dealing with landlord consent;
• reviewing physician and contractor agreements;
• addressing patient-record and PHIPA issues;
• conducting corporate and PPSA searches;
• preparing closing documents;
• coordinating security discharges;
• working with the accountant and lender; and
• closing the transaction.

You can learn more about our business purchase and sale legal services.

How Falcon Law PC Can Help

Falcon Law PC assists physicians, clinic owners, healthcare entrepreneurs and purchasers with medical-practice acquisitions and sales, healthcare business structuring, professional corporations, clinic leases, associate and contractor agreements, management arrangements, privacy issues and related corporate and commercial matters.

When we act on a healthcare acquisition, our objective is not simply to get the purchase agreement signed. We want the purchaser to understand the corporate structure, premises, workforce, contracts, patient-record arrangements and liabilities that will exist on the day after closing.

If you are considering purchasing or selling a medical practice or healthcare clinic in Ontario, I generally recommend involving your lawyer and accountant before finalizing the letter of intent or other major deal terms.

This article is intended for general informational purposes only and does not constitute legal, tax, accounting, healthcare-regulatory, employment, privacy or professional advice. The legal requirements applicable to a healthcare transaction depend on the profession, transaction structure, corporate entities, contracts, patient-record arrangements and other circumstances.