So You Want to Sell Your Medical Practice? Here are the Six Things to Know!
The decision to sell the medical practice is inevitable for a majority of sole practitioners and practice owners. Not without a good reason. The sale – whether for retirement or for making a career transition – can provide a range of benefits to the owner.
Do you know exactly how to go about selling your medical practice for maximum profits, notwithstanding the market conditions? Yes, you read that right – it is possible to maximize profits despite the condition of the market at the time of sale.
And the good news is that you can make it happen with relative ease! As the owner of a medical practice, there are several simple, albeit important things you can do to ensure sale-readiness, optimize sale price, and maximize returns at the conclusion of the sale.
How to sell a medical practice with low hassles and high gains
Before we delve into the details of how to sell your medical practice with best results, here's a quick question for you: are you sure you want to sell?
Take your time to answer that. Think about not just the financial but also the emotional aspect of the sale. When you sell a medical practice that you've had for years, you sell a part of life that occupied much of your time. So it's important to picture what life will look like for you after the sale, before inviting interests from people who want to buy the medical practice.
Review your reasoning behind the decision to sell your medical practice, and consider alternative arrangements. For instance, you may choose to sell your practice to a hospital or a larger chain of clinics. That would allow you to join the practice as an employee rather than the owner or the sole practitioner. In this scenario you will continue doing what you love – treating patients – without dealing with the hassles of managing the business aspects of the practice.
Thought about it? Good. So you think you're really ready to sell your medical practice? Congrats! You have successfully taken the first step. Now let's get back to our question – how to sell the medical practice with low hassles and high gains?
Below are the five steps to consider:
- Step 1: Get your books in order
Prospective buyers need to feel confident in a venture before they decide to buy the medical practice. One easy way you can instill this much needed confidence is by providing financial information of your practice, for at least the last three years. Opt for the more formal financial records – such as tax returns, accounts prepared or accounts reviewed, and not just your internally generated financial statements. Prepare copies of all important documents and arrange them neatly for your prospective buyer so that he or she feels confident about the information you present to them is credible.
- Step 2: Review and present an accurate statement of cash flow
Does your practice handle nonoperational expenses as well? You may have leased out your personal car using your medical practice. You may have included other nonoperational expenses, such as travel in business records. Be sure to review the expenses and remove them from the statement of recurring cash flow you present to a prospective buyer.
- Step 3: Seek medical practice valuation from a certified professional
Practice valuation from a professional will provide you an objective idea about the actual worth of your business. This has two key benefits – 1) you can be sure that you're demanding the right price for your medical practice and not leaving money on the table, and 2) a valuation done by a certified professional will provide your prospective buyers the confidence they need to invest their money into your business. This boost in confidence further speeds up the selling process. For tips on selecting a valuation professional, read our article: “What to consider when selecting a valuation professional for a medical practice appraisal”.
- Step 4: Keep running the practice at full throttle
Don't slow down business just because you are sure you want to sell the medical practice. Continue working full throttle. This will prevent your medical practice value from dropping down, due to reduced operations. Too many doctors decide to cut down on their schedule, which negatively impacts their revenues and earnings and leads to a lower practice value. Instead, continue working at the same level and engage all of your staff to assist you in bringing in more patients. This will boost your practice price when the time comes to sell.
- Step 5: Engage an expert medical broker
The stakes are high – you get only one shot at selling your medical practice that you have nurtured with your blood and sweat. Take no chances; hire a trusted medical broker or an expert intermediary from trusted healthcare consultants firm. Let them help you navigate the process while you can do what you do best – treat your patients. Transaction consultants specializing in the sale of medical practices will help you complete the sale in a smooth and timely manner while avoiding pitfalls.