When a Practice Sale and a Marriage Both Needed Sorting At Once

The situation

Besnik called us the week his broker sent over a draft information memorandum for the sale of his practice corporation, a document meant to introduce the business to prospective buyers. He was not calling about the marriage. At that point he did not think the two things had anything to do with each other. He was a specialist physician who had built a multi-practitioner clinic in Deep River over almost two decades, incorporated the practice years earlier for tax and liability reasons, and was now ready to step back and sell to a buyer who could carry it forward. The corporation held the clinic's premises, equipment, staff and administrative operations rather than Besnik's own billings, which by law had to stay tied to his personal physician licence; structuring the practice that way was also what made it possible to sell the business to a buyer who was not herself a physician, since Ontario restricts ownership of a doctor's own professional corporation to physicians and certain family members. Seo-yeon, a dentist who had built her own successful practice elsewhere and was looking to diversify into medical services, had expressed serious interest, and the broker wanted the information memorandum finalized quickly to keep her engaged.

The draft memorandum described the practice in glowing terms, projecting revenue growth over the next several years that assumed Besnik would continue working full clinical hours indefinitely and that patient volumes would keep climbing at the pace they had over the previous two years, a period that had in fact been unusually strong and not representative of a typical year. The projections were not fabricated exactly, but they extrapolated an unusual run of good years forward as if it were the new baseline, without accounting for Besnik's own plan to reduce his hours as part of the sale itself.

Besnik wanted our help making sure the numbers going out to a serious buyer were defensible, since an inflated projection that later proved wrong could expose him to a claim that he had misrepresented the business to induce the sale. That was the reason for the call. What came up only after we started digging into the corporate structure behind the practice was a second issue entirely: Mirela, Besnik's spouse and a minority shareholder in the practice corporation from an earlier tax-planning arrangement, was in the middle of a separation from Besnik that neither the broker nor Seo-yeon knew anything about.

Mirela's shares meant the sale could not proceed as a straightforward transaction between Besnik and a buyer. It needed her agreement too, and her agreement was now tangled up with a separation where the value of those very shares was one of the things being negotiated between them.

Besnik had not mentioned the separation when he first called, and it was not clear he had connected it to the sale in his own mind until we walked through the corporation's share ownership together. The shares had been issued to Mirela years earlier on an accountant's advice, a common enough arrangement for tax planning between spouses, and in the ordinary run of a marriage they would never have mattered to anyone outside the family. A pending separation changed that entirely.

What made this urgent

Two problems intersecting mid-file is a different situation than two problems happening to exist at the same time, because each one changed how urgently the other needed to be handled. The information memorandum's optimistic projections were a business risk on their own: if Seo-yeon relied on them to agree a purchase price and the practice's actual performance came in materially lower after closing, she could have grounds to claim she was misled into paying more than the practice was worth, a claim that becomes much stronger when the seller's own lawyer knew the projections were shaky and let them go out anyway.

But the shareholder question made the timing far more pressing, because it meant the corporation Besnik was purporting to sell in the memorandum had a second owner whose consent had not been secured and whose own interests were, at that exact moment, adverse to Besnik's in an unrelated but overlapping negotiation. If the sale to Seo-yeon moved forward on the terms in the memorandum without resolving Mirela's position, there was a real risk that either she would block the transaction once she learned of it, or that the value attributed to her shares in the practice sale would become a point of dispute in the separation, with each side arguing for a different number depending on which negotiation they were thinking about.

There was also a subtler problem: family property division in a separation is generally based on the value of assets as of specific dates set by the process, and an inflated information memorandum circulating to prospective buyers could itself become evidence in that separate negotiation about what the practice, and therefore Mirela's shares in it, were actually worth. An unrealistically high projection prepared for one purpose does not stay contained to that purpose; it becomes a number both sides can point to later, whether or not it was ever accurate.

Time pressure came from Seo-yeon's side as well. She was actively evaluating other opportunities and had made clear she needed a credible package to keep moving forward with diligence. A delay to sort out an internal ownership question, without a clear explanation, risked reading as a red flag serious enough to make her walk away from the deal entirely, which would have cost Besnik the sale he had been planning around for the past year. Every day the memorandum sat uncorrected in circulation, and every day the shareholder question sat unresolved, increased the odds that one problem would surface in a way that made the other impossible to manage cleanly.

What we did

1. Pulled the memorandum back from circulation before it reached Seo-yeon's advisors. Buying that window let us fix both problems properly instead of racing to patch a document already sitting in a prospective buyer's hands, which would have made any later correction look like damage control rather than ordinary, careful diligence completed before anyone relied on the numbers to negotiate a price.
2. Rebuilt the revenue projections together with Besnik's accountant. We worked from a realistic assumption: continued operation at Besnik's actual reduced clinical schedule, with growth projected at a pace consistent with the practice's longer multi-year history rather than its unusually strong final two years. The revised numbers were lower, but they were numbers Besnik could stand behind if a buyer later asked how they were derived.
3. Recognized the conflict in Mirela's position and stepped back from advising her. Because her interests as a shareholder in the separation were adverse to Besnik's on the very question of what her shares were worth, we could not act for both of them. We recommended she retain her own family law counsel to value and negotiate her shares while we continued advising Besnik on the corporate and sale side of the file.
4. Negotiated a sequencing arrangement rather than waiting for the separation to fully resolve. Mirela agreed to consent to the sale going forward, on the condition that her share of the proceeds would be calculated against the practice's actual closing price rather than any earlier projection, and held in trust pending the broader separation negotiation between her and Besnik, so neither process had to wait on the other.
5. Reissued the information memorandum with the corrected projections. We disclosed, in general terms appropriate for a marketing document, that the corporation had more than one shareholder whose consent to the sale had been obtained, which is standard practice and did not require revealing the separation itself to Seo-yeon or her advisors at this early stage of the deal, or at all.
6. Documented the basis for every change in our own file. We recorded why the projections had been revised and how Mirela's consent had been reached, anticipating that either decision might later be questioned by Seo-yeon's advisors during diligence or by counsel in the family law proceeding, once the separation eventually moved toward its own resolution and valuation date months later.
7. Prepared Besnik to explain the revised numbers honestly rather than defensively. We walked him through the reasoning behind each change so that if Seo-yeon's advisors asked why the figures had shifted between an early informal conversation and the formal memorandum, he had a straightforward, documented answer rather than something that would sound evasive or concerning under closer questioning later on.

The outcome

Seo-yeon proceeded with the purchase based on the corrected memorandum, at a price roughly ten to fifteen percent lower than what the original optimistic projections would have supported, reflecting the more conservative and defensible revenue forecast. Besnik accepted the lower figure as the cost of avoiding a much larger risk: a buyer who discovered after closing that the numbers she relied on had been inflated, with a viable claim to unwind the deal or seek damages. Her advisors did ask why the earlier informal figures they had heard about differed from the final memorandum, and the documented, defensible explanation we had prepared with Besnik was enough to satisfy them without raising further concern about the rest of the disclosure.

Mirela's consent held, and her share of the proceeds was calculated against the actual closing price rather than the inflated projection that would have otherwise distorted her own entitlement in a way neither side could have defended cleanly. Her separate representation meant her interests were protected without her needing to insert herself into the sale negotiation directly, and the two processes concluded without either one contaminating the other's outcome. The separation itself remained unresolved after the sale closed, but the one asset most likely to cause conflict between the two processes, the practice corporation, was no longer a moving target once its value was fixed by an actual sale price rather than a projection.

The sale closed roughly four months after Besnik's initial call, longer than the straightforward transaction he had originally expected, but without the far more expensive outcome of a buyer's misrepresentation claim or a shareholder dispute stalling the deal indefinitely. Besnik came away having accepted a real reduction in what he received for the practice, which he did not consider a good outcome in isolation, but understood as the contained version of a problem that could easily have cost him significantly more had either issue surfaced after closing instead of before it. He has said since that the four months of extra care felt frustrating at the time, but far less painful than the alternative he narrowly avoided.

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