Selling Your Practice? Important Issues To Consider

Lay the Groundwork

Start by taking a critical look at your practice’s current financial condition. Identify areas of weakness. For example, does your medical practice experience poor collections or weak cash flow? How do your staffing levels compare to those of similar practices? Issues such as these can reduce the appeal of your practice. It’s to your benefit to deal with them well before you put your practice on the market.

You’ll want to have a realistic appraisal of your practice’s potential worth before you put it up for sale. Tangible assets, such as medical equipment, computers, and furniture, are relatively easy to value, though they generally make up only a small part of a medical practice’s total value. Goodwill is an intangible asset that can be difficult to value. But there are methods that can be used to establish a reasonable estimate.

Identify Potential Buyers

You may receive an unsolicited offer. If you don’t, consider reaching out locally or contacting a broker who specializes in selling medical practices. An experienced broker can identify and contact qualified potential buyers.

The speed with which a sale may occur may largely depend on the deal you’re seeking. Do you want a buy-out that will let you continue to practice as an employee? In that case, looking for a group practice, hospital, or other corporate buyer may be the best route. If the sale goes through to one of these entities, you will be able to continue to work in medicine without the responsibilities of ownership.

If retirement is your goal, you may opt for a gradual buy-in by a physician who will take over your practice. Typically, this arrangement requires you to employ the prospective buyer and, under the terms of the deal, after a trial period of a year or two, offer a partnership with a documented exit arrangement for you. This arrangement could be in the form of a severance package.

Review All Offers Carefully

If you receive an offer, your focus should be on the would-be buyer’s financial condition and the payment terms if you plan on retiring. If you plan to continue working at the practice with the individual or entity who may buy it, you should carefully review all ramifications, including transfer expenses and malpractice terms involved in the sale.

Apart from satisfying yourself about the financial and legal issues involved in the sale, you should also feel that you will be able to fit into the potential buyer’s organization and that your advice and input will be welcomed.  Remember, whatever way your medical practice’s sale is structured, there will be tax implications.

The business advisory team at CIG Capital Advisors can  help you evaluate potential medical practice sale offers and determine the terms which might make it the right deal for you. Schedule a complimentary consultation with one of our business advisory professionals today.