though structural Used to create services are options range something new coordinated Leadership may Usually smaller from a weak to (limited inpatient be a combination acquired by strong affiliation or outpatient New overarching of the two larger, but not structure activity, service, governing board entities, or from always purpose) that created by the an outside source Utilized to may be difficult entities while Goals: increase increase to do solo also maintaining The entities market share, footprint, gain their own absorb each footprint, acquire economy of Shared independent assets and additional other’s scale, create governance boards debts services, referrals, financial stability supplement an Contains some May borrow for Goals is to already form of capital increase Entities may successful set of investments as economy of continue to services, one entity scale, improve function exchange best quality, increase or practices Similar to a JV market share make changes to but larger; match buyer beyond a specific service or activity When structuring transactions with physicians, as will be discussed further below, different structures can be explored to achieve the results of physician integration without acquisition of the physician’s practice. SUCCESSOR LIABILITY In determining the most appropriate structure for a merger or acquisition, one of the primary determinants of the structure to be used is successor liability: whether the acquiring entity will have any liability for obligations and liabilities that will cost the acquirer money or expose it to claims or lawsuits after the transaction closes. The general rule is that that purchases the assets of another corporation is “a corporation generally not liable for the State of New York 460 seller’s liabilities.” v. Nat’l Serv. Indus. Inc., F.3rd 201 (2d Cir. 2006). However, the general rule has certain well-defined exceptions. Courts have held that the buyer of a assets will be liable as a successor in the following corporation’s situations: The buyer expressly or impliedly agreed to assume its predecessor’s liability. An analysis of the asset purchase agreement underlying the transaction will often identify if there was an express agreement to assume liabilities.
though structural options range from a weak to strong affiliation structure Utilized to increase footprint, gain economy of scale, create referrals, supplement an already successful set of services, exchange best practices Used to create something new (limited inpatient or outpatient activity, service, purpose) that may be difficult to do solo Shared governance Contains some form of services are coordinated New overarching governing board created by the entities while also maintaining their own independent boards May borrow for capital investments as one entity Similar to a JV but larger; beyond a specific service or activity Leadership may be a combination of the two entities, or from an outside source The entities absorb each other’s assets and debts Goals is to increase economy of scale, improve quality, increase market share Usually smaller acquired by larger, but not always Goals: increase market share, footprint, acquire additional services, financial stability Entities may continue to function or make changes to match buyer When structuring transactions with physicians, as will be discussed further below, different structures can be explored to achieve the results of physician integration without acquisition of the physician’s practice. SUCCESSOR LIABILITY In determining the most appropriate structure for a merger or acquisition, one of the primary determinants of the structure to be used is successor liability: whether the acquiring entity will have any liability for obligations and liabilities that will cost the acquirer money or expose it to claims or lawsuits after the transaction closes. The general rule is that “a corporation that purchases the assets of another corporation is generally not liable for the seller’s liabilities.” State of New York v. Nat’l Serv. Indus. Inc., 460 F.3rd 201 (2d Cir. 2006). However, the general rule has certain well-defined exceptions. Courts have held that the buyer of a corporation’s assets will be liable as a successor in the following situations: The buyer expressly or impliedly agreed to assume its predecessor’s liability. An analysis of the asset purchase agreement underlying the transaction will often identify if there was an express agreement to assume liabilities.