A survey conducted by the American Medical Association indicated that over 49 percent of patient care physicians possess their own medical practice.
Combine that with the limitless earnings of owning your own practice, and you quickly realize the demand for private medical practices is unrivaled among nearly all other business sectors.
Whether you’re looking to retire, relocate, or sell your practice due to financial constraints, the time to sell is now! Although you may feel clueless now, by the time you’re done reading this article, you’ll learn everything you need to know when it comes to selling your private practice!
Determine the Value of Your Medical Practice
One of the more perplexing factors when selling a medical practice is determining its value.
An excellent place to start is compiling a year-after-year profit and loss statement, and normalizing these numbers. Each revenue and expense item pertaining to your practice should be included. This will not only help you value your business – but give buyers the expected and ongoing income of your practice.
Of course, there’s a multitude of subjective risk factors that may complicate the valuation process. Some of these factors include:
- Practitioner turnover
- Your specific systems and processes
- Billing methods
- Practice accreditation
Remember, a business is only worth what someone is willing to pay for it. An investment banker or M&A advisory firm such as medworldadvisors.com can guide you in the right direction.
Consider the Values of Your Buyer
Any successful business transaction starts with compatibility among the associated parties. Every medical practice is unique in its operations, services, and culture.
Thus, in addition to conducting financial and regulatory due diligence, it’s imperative to conduct cultural due diligence. Buyers should share similar principles, values, and ethics to that of the business in question.
It’s advisable that you discuss the outlook of the managerial approach post-closing. Some topics that may be worth discussing include:
- The involvement and role of administrators, nurses, physicians, and front desk staff
- The level of transparency
- Employee compensation
- Workplace diversity
- Customer prioritization
Trust and transparency are vital aspects of a successful business negotiation. Oftentimes, deals fall through due to dissimilar functions and values.
Ensure Transaction Documents Are Comprehensive
When you sell a medical practice, transaction documents should be comprehensive and fully transparent. All relevant conditions of the sale should be set forth in the sales agreement.
It’s important to document all verbal agreements prior to any negotiations. Otherwise, initial agreements can become mixed-up and are unsubstantiated in a legal context. This can lead to distrust and doubt, potentially causing the business deal to fall apart.
It’s also vital that the documents outline the terms of an unwind. Unfortunately, business deals can fall apart, and many sellers overlook this prospect. Therefore, if you find yourself in the situation of an unwind, it’s important that the stipulations are detailed within the contract.
How to Sell Your Medical Practice
Selling a medical practice can feel like an impossible task. However, when you break it down, the process is less complicated than most believe.
Remember to start by determining the value of your practice. From there, look for a buyer that shares your culture and values. Also, ensure the terms and conditions are comprehensive and properly documented.
With the help of these tips, you’ll be on your way to the bank in no time!
If you’re looking for more valuable information pertaining to your business, be sure to check out our other detailed guides!