‘So, I’m considering the sale of my medical practice…now what?’
Whether you’re looking to pursue ventures or you’re ready to retire to enjoy life after work, you might be wondering ‘how do I sell my medical practice?’ Selling a medical practice is not something one does often, it’s a big decision that requires careful planning and preparation to ensure that you have the right exit strategy. Not all medical practices are worth the same amount, generally the more profitable your clinic is, the easier it will be to sell or merge. Therefore, growing your medical practice into a profitable and scalable business that is not solely dependent on your labor, is one of the things that will make it more attractive to prospective buyers. However, there are a few more things to consider when selling a medical practice that could maximize the value of your practice in the market and make your exit strategy as smooth as possible.
Tips when selling a medical practice:
Planning and Preparation is Paramount
As previously mentioned, selling a medical practice is not something you do often, and chances are you may only do it a few times over the course of your career, so it makes senses to give yourself enough time to prepare for the sale and seek professional advice from your financial advisor in order to avoid any setbacks during this time.
Planning 12-18 months ahead will allow you to correctly value your clinic and avoid overpricing, which is a common reason for why businesses don’t sell. Getting a professional medical practice valuation is an excellent way to ensure that the price of your clinic is reflective of your asset value and goodwill and will better help you understand what your medical practice is worth objectively. Seeking a professional appraisal is also appealing to potential buyers as it indicates that your sales price has been objectively valued by an unbiased independent expert and is based on the accepted industry standard.
Taking the time to arrange the handover process to ensure that the practice runs smoothly is another important factor that requires planning and preparation. This may include tasks such as discussing standards of patient care with the buyer, introducing the buyer to your practice methods, notifying staff and patients and determining how long the hand over the process will take.
Manage Your Finances
Making sure your books are in order prior to selling a medical practice should be one of the first steps in preparing for a sale. It is also best practice to ensure your books show positive growth and present a desirable business image at least 18 months before listing your business for sale.
For example, it is common for small business owners like medical practitioners to put certain personal or family related expenses on their business. For example, a practitioner may purchase a mobile phone for his wife who also works at the clinic and put it on the books. These types of expenses should be removed prior to selling a medical practice as they can affect the net profit and may be difficult to explain.
Another best-practice method when preparing your business for sale is to bill with the practice at its full capacity so that the potential buyer can see what the practice is capable of billing in a 12-month period. Also, try to cut expenses where you can and think about resizing your team (up or down) so that you have the correct number of employees for the present workload.
Utilize Experienced Advisors
Understanding the minutiae of selling a medical practice in today’s market can be a complicated process and seeking professional advice once you’re ready to list your business for sale can be a useful strategy.
Engaging experienced professionals such as lawyers, financial advisors, and brokers to help you evaluate your business, prepare documentation and manage the sales process, can help you avoid unnecessary mistakes that can cost you time and money. Although seeking professional advice will be an additional cost, you should assume that the potential buyer will most likely consult expert advisors during the sale negotiations, so it pays to be prepared.
Additionally, it might be useful to seek advice from a specialist consultant or another physician who has gone through the process of selling a medical practice so that you can gain an independent perspective.
Tend to Your Business Appearance
Before selling a medical practice, it is good to take some time to assess the premises to make sure that it does not look visibly run down. These factors might not seem significant at first, however, they could be the deciding factor for a new owner and can also impact the sales price. First impressions count, so going to extra mile to fix up chipped paint, a broken door or leaking tap can’t hurt. Also, keep in mind that in an open market other potentially more attractive properties are competing for the prospective buyer’s attention.
Additionally, maintaining a good online presence can help you attract new patients and build credibility through social networks such as Facebook, LinkedIn, and Instagram and search engines such as Google, Yahoo etc. Having an online presence is vital as most patient referrals come by word of mouth through friends and family or via internet searches. This can be an effective and efficient way to market your practice.
Know When to Sell
It’s unlikely that you will sell your practice immediately, which is why it is important to give yourself a reasonable timeframe. Keeping a close eye on the demand in the market and ensuring that the medical environment is stable is a good way to stay prepared.
Physicians should do as much research as possible to determine what kind of market trends are ahead to ensure that they put their practice for sale at the right time. In the meantime, it is important to keep the business running well and have solid financial management, so that your business is attractive to potential buyers and always ready for a sale.
At MedLaunch, our team of experienced professionals is here to provide you with all the information and options you need when you’re considering the sale of your medical practice. Get in touch with us today or leave us a comment below if you have any questions.