Seller Wants to Delay Closing due to PPP2-What Does a Buyer Do?

It’s fall 2020, and you have found a practice that checks just about every one of your wish list boxes. You have engaged professionals to assist you with the due diligence, nailed down your lender for the loan, negotiated a new favorable lease with the landlord, and have the closing date nailed down as well for late January 2021.

Then, congress passes the CAA in late December, opening up more PPP funds (PPP2). Your Seller alerts you that they have applied for a PPP2 loan and will need to postpone the closing until eight or twenty-four weeks later, at the earliest, until they receive SBA forgiveness for PPP2.

What do you do?

That is the situation one of our buyer clients is facing, and I suspect this will be a problem for many practice transitions through March. If you are a buyer in the process of a practice transition, be prepared to deal with this issue. The Seller is asking for something from you, and therefore, you need to be prepared to ask for something from them. Your situation may be a little different, so you may have different strategies that you will need to consider. Do NOT be afraid to ask for anything you may want. Nothing is off the table at this point.

Here are some of the strategies we are currently discussing to present to the Seller in our case:

  1. We have identified some equipment issues that need to be addressed, and we will ask the Seller to make these purchases to add or replace certain pieces of equipment before closing
  2. The physical space has not been updated in over twenty years, so we may ask the Seller to pay for these updates before the close
  3. The Seller hires the Buyer now to run the practice at a higher than normal compensation rate that is a percentage of ALL collections, something like 40%, enough to cover an associate’s normal compensation PLUS the typical profits of the practice
  4. There will be a price reduction of $x,xxx for each business day there is a delay in closing…this amount will be an approximate amount of “profit” the Buyer would have had if they closed on the original closing date
  5. All A/R will be included in the sales price that has already been agreed to

These are just five of the ideas we are contemplating, and we may wind up with one of them or even a combination of some of them.

The bottom line is that the Seller should not be allowed to simply delay closing and retain and receive all the benefits of a delayed closing PLUS PPP2. In situations like these, the Buyer’s experienced advisors can provide a lot of value as they will likely have multiple clients going through the same issue.

Attention Buyer – Beware, and Be prepared!


About Tim Lott
Tim Lott, CPA, CVA, has decades of experience working with dentists at all stages of their careers. He is a regular speaker at study clubs, societies, and dental schools. Tim is a frequent participant and a moderator of You can reach Tim at or any of the other dental partners/principals at (800)772-1065 or