We recently looked at the pros and cons of buying a practice, or buying into one. But what if you’re on the other side of this transaction? Nationwide, many physicians are making the choice to sell their practices, often to larger medical groups or hospitals. They may enter into an employment agreement with the purchaser, perhaps seeking a better work/life balance and the stability of a regular salary. Others sell their practice upon retirement instead of closing it.
Regardless of the reason for selling, there are numerous complex issues a medical practice must consider when its owners decide to sell. Both the preparation for the sale and the actual transaction present issues. Physicians must properly prepare their practice for the sale or risk receiving less than the maximum valuation of their practice.
Take your time. Years of preparation may be needed to sort through the challenges of a sale.
Get an honest evaluation of your practice. Physicians who know the value of their practice have a benchmark for negotiating with prospective buyers.
That said, start with a realistic asking price. This might mean resisting the urge to monetize all your hard work—you’ve built a thriving practice with long hours over many years, and that should be priceless… but it might not be, in the economic reality of 2016.
Get your business operations in order. Consider removing business expenses that might not pass muster under new ownership, such as personal cell phones or computer equipment. Showing what you bill versus what you collect can also help maximize the value of your practice.
Try to get more than one interested buyer. Consider contacting likely prospects—such as your competitors or your admitting hospital—to let them know you’re thinking of selling and gauge their interest in your practice. Multiple suitors can increase your selling price.
Realize that paper is a liability. Convert to EMR/practice management software before selling. Your prospective buyers don’t want to purchase the task of converting patient charts and records to an EMR.
Ease the transition for the new owner. If possible, offer to stay on for a few months to introduce patients to the new physician(s) and vice versa.
Selling a medical practice is rarely simple, and planning a sale two to three years out can be a gamble influenced by factors beyond your control. However, you can boost your potential sale price through careful preparation, including the steps above, to provide the most value for the buyer and least disruption for your patients.
