Multiple objectives when deciding to sell a medical practice
Why plan a transition earlier than later?
The decision to sell a medical practice usually is based on a number of factors. Retirement and lifestyle issues are common considerations but unfortunately, distress sales situations driven by death or disability are becoming more commonplace. We always stress the importance of planning early and developing an ongoing list of financial, lifestyle, and other objectives to evalute as you go along.
What to put on your objectives list
The difficulty in planning for the eventual sale of any business is prioritizing your needs and wants. This is even more difficult in a healthcare practice, where the practice may be substantial part of the owner/operators personal and professional identity. The practice also may have considerable value to your family, patients, staff, and the community at large.
"Value" is a term which can encompass a series of tangible and intangible items. It is important to form a list of these priorities to all stakeholders. At the 11th hour of a practice closing I have seen sellers back out of the deal because all of these things hit them at once: "What will happen to my patients and staff? What will I do with my free time? How will my family pay its bills?". Get all of these things on paper sooner than later and continuously re-evaluate and change them as you go along. This will prevent the avalanche of considerations from paralyzing you when it finally comes time to sell a medical practice.
I'm Ready to Sell. What now?
The particular objective of the seller and his/her time-frame will dictate how the medical practice broker will put together a selling strategy and may determine the type of deal structure to expect. A seller needs to be firm but flexible. It is important to obtain the ideal price and terms for the practice but not to shut-out a potential deal by ignoring buyer desires and the market realities for selling a medical practice. This is where the communication and trust between practice broker and seller becomes crucial. A broker's expertise (or lack thereof) can ultimately affect the saleability of the practice and reflect in the final price and terms obtained. Balancing personal and professional objectives with sound business decisions is the difficulty which practice sellers face. In short, practice owners should take the following into consideration when selling:
- Reason for selling the medical practice
- Personal and professional objectives related to the sale
- Time-frame to achieve objective
- Price, terms, and time-frame desired in a deal
- Flexibility or rigidity in obtaining desired price, terms, and time-frame
- Tax consequence
- Proceeds of the sale and how this fits into the retirement & wealth management plan
- Decision to work with a medical practice broker / medical practice consultant
- Expertise, trust, and communication of the broker / consultant and seller
Transition Consultants assists private practice doctors will all aspects of buying, selling, and appraising medical practices.