7 Questions to Ask Before Buying a New Fertility Clinic

Buying an existing fertility clinic can be a smart way to enter the market with an established patient base and referral network. But the financial and tax complexities are significant. Before you sign anything, you need answers to seven specific questions. These will protect you from hidden liabilities and help you structure the deal for maximum tax efficiency. Here is what to ask, and why it matters.

1. What Is the Clinic’s Tax Structure, and Will It Change After the Sale?

The clinic’s current entity type (LLC, S-corp, C-corp, or sole proprietorship) affects how you’ll be taxed after the purchase. If the seller is an S-corp, their profits pass through to their personal return. If you buy the assets and form a new entity, you can choose your own structure. But if you buy the stock of a C-corp, you inherit its tax history, including potential double taxation on future dividends.

Ask: “What is the current entity type, and do you have three years of tax returns I can review?” Also ask: “Are there any outstanding tax liens or unpaid payroll taxes?” Unpaid payroll taxes can become your responsibility if you buy the stock. If you buy assets, you can avoid most of those liabilities, but you’ll need to renegotiate contracts and licenses.

Practical step: Have your CPA review the last three years of federal and state tax returns before making an offer. This will reveal any red flags like inconsistent income or aggressive deductions.

2. What Is the Real Value of the Equipment and Leases?

Fertility clinics rely on expensive equipment: ultrasound machines, incubators, and lab analyzers. The seller may list these at book value, but their fair market value could be much lower. Also, check if the equipment is leased or owned. If leased, you’ll need to assume the lease or negotiate a new one.

Ask: “Can I get a detailed equipment list with age, condition, and lease terms?” Also ask: “Are there any equipment loans or liens?” If the seller still owes money on equipment, you don’t want to inherit that debt unless you’re getting a corresponding tax benefit.

Practical step: Hire an independent appraiser who specializes in medical equipment. They can give you a realistic value for tax depreciation purposes. This will also help you allocate the purchase price among assets, which affects your depreciation deductions.

3. How Will You Allocate the Purchase Price for Tax Purposes?

When you buy a clinic, you and the seller must agree on how to allocate the purchase price among different asset classes: equipment, furniture, goodwill, patient lists, and non-compete agreements. This allocation matters because each class has a different depreciation schedule. Equipment can be depreciated over 5-7 years, while goodwill is amortized over 15 years. A higher allocation to equipment gives you faster tax write-offs.

Ask: “What allocation does the seller propose, and can we negotiate?” The IRS requires both parties to use the same allocation (Form 8594). If you don’t agree, the IRS may challenge it.

Practical step: Work with a tax advisor to propose an allocation that maximizes your early deductions. For example, you might allocate more to equipment and less to goodwill, but the seller may want the opposite because they’ll pay capital gains tax on the difference.

4. Are There Any Outstanding Liabilities or Lawsuits?

Fertility clinics face malpractice risks, and a pending lawsuit can be a ticking time bomb. You need to know about any claims, even if they haven’t been filed yet. Ask for a list of all pending and threatened litigation, and check with the state medical board for any disciplinary actions.

Ask: “Have you had any malpractice claims in the last five years, and what was the outcome?” Also ask: “Are there any HIPAA violations or compliance issues?” A history of HIPAA fines can be a red flag.

Practical step: Have a healthcare attorney review the clinic’s compliance program and any past settlements. If there are pending lawsuits, negotiate a holdback or indemnification clause in the purchase agreement.

5. What Is the State of the Patient Records and Billing?

Patient records are a valuable asset, but they come with privacy obligations. You’ll need to ensure that the clinic’s record-keeping is HIPAA-compliant and that you can transfer records legally. Also, review the billing practices: are there any outstanding claims or denials? Unbilled services could be a source of revenue, but they also require work.

Ask: “Can I see a sample of patient records and billing reports?” Also ask: “What is the average collection period and denial rate?” These metrics tell you about the clinic’s financial health.

Practical step: Run a billing audit with a specialist who knows fertility coding (e.g., CPT codes for IVF, ICSI, etc.). This will help you estimate future revenue and identify any compliance issues.

6. What Are the Employment Agreements and Staff Retention Plans?

Your staff, especially embryologists and lab directors, are critical to the clinic’s success. If key employees leave after the sale, your revenue could drop. Review all employment contracts, including non-compete and non-solicit clauses. Also, check if there are any deferred compensation or pension obligations.

Ask: “Can I meet the key staff members before the sale?” Also ask: “What is the staff turnover rate, and are there any pending employment claims?”

Practical step: Offer retention bonuses to key employees as part of your transition plan. This is a tax-deductible expense for your new business.

7. What Is the Seller’s Role After the Sale?

Many clinic sales include a transition period where the seller stays on as a consultant or medical director. This can be valuable for maintaining patient trust and referral relationships. But it also has tax implications. If the seller is paid as a consultant, that’s a deductible business expense. If they remain an owner, the tax treatment changes.

Ask: “Are you willing to stay for a transition period, and what are your expectations?” Also ask: “Will you sign a non-compete agreement?” A non-compete is amortizable over its term, which gives you a tax deduction.

Practical step: Structure the transition agreement in writing, with clear duties and compensation. Have your attorney draft a non-compete that is reasonable in scope and duration.

FAQ

Q: Should I buy the assets or the stock of the clinic?

Asset purchases are generally safer for buyers because you can avoid inheriting liabilities like unpaid taxes or lawsuits. Stock purchases are simpler but riskier. Most buyers choose asset purchases, but your tax advisor can help you decide based on the specific situation.

Q: How much should I set aside for taxes in the first year?

A common rule of thumb is to set aside 25% to 35% of your net profit for federal and state taxes, but this varies. Work with a CPA to estimate your quarterly estimated tax payments. Many new owners are surprised by the tax burden, so plan ahead.

Q: Can I deduct the purchase price of the clinic?

You cannot deduct the purchase price in one year. Instead, you’ll depreciate or amortize the assets over several years. However, you may be able to use Section 179 or bonus depreciation to write off a large portion in the first year, depending on the asset type and your business structure.

Q: What if the clinic has unpaid payroll taxes?

If you buy the stock, you may be liable for those taxes. If you buy assets, you generally are not, but you should still verify that all payroll taxes have been paid before closing. Have the seller provide proof of payment from the IRS.

Related guides

• 7 Things to Know Before You Start a New Fertility Clinic
• Best New Fertility Clinic Tools Compared in 2026

The bottom line

Buying a fertility clinic is a major investment, and the tax implications can make or break your deal. Ask these seven questions before you sign anything. Get professional help from a CPA and a healthcare attorney who understand the fertility industry. With careful due diligence, you can structure a purchase that minimizes your tax burden and sets you up for long-term success.