Practice owners may have many reasons for selling their practice; be it for retirement, pursuing a new passion or opportunity, or personal hardship which requires greater attention than can otherwise be afforded. Whatever the reason, it is important owners understand that selling a practice often takes more time and effort than selling a hard asset such as a vehicle or real estate. With that in mind, developing a practice exit plan well ahead of listing is key to maximizing the deal.
Negotiating for yourself or exposing the company name and details ahead of a signed NDA can cause substantial damage to a practice during the sale process, which is arguably the most vulnerable time for a business. Patients and employees may fear instability, leading to lower productivity and reduced revenue at the worst time possible. It’s advisable to hire a third party to represent your practice to prospective buyers.
Run Your Practice Like You’ll Do It Forever
The final quarters in your practice should be among your highest grossing. There’s nothing better than showing a prospective buyer the practice’s best years are ahead! Consider the blood, sweat, and tears you put in to grow the practice to this point a warm-up for your grand finale at the helm.
Get a Realistic Valuation
Practice valuation isn’t a one-size-fits-all calculator. There are nuances for each practice and industry that appeal to different prospective buyers; an online tool or Fair Market Value report cannot account for the nuances, and assess a value based on an algorithm. Consider an investment in a techniques or procedures that haven’t been realized—a calculation based on the last 5 years’ revenue may not consider the potential for the new practice services over the next 3 years. A methodical deep dive by a practice valuation expert takes each nuance into account as they build the valuation.
Have A Thorough Offering Memorandum
Hopping online and performing a quick search for ‘Offering Memorandum Example’ provides more than 16 million results, yet not a single one is a dead ringer for your practice. You’ve spent years building your practice, the single document describing the value your company offers should not be left to a quick template you found on the internet.
I’m sure by now you’ve learned the value of surrounding yourself with smart people. Finding the right practice broker to represent you while selling your practice is of utmost importance. Look for an M&A firm who knows your market, has experience in your industry, and excels at marketing your practice to the proper audiences to solicit multiple offers. Even more valuable is the insight they can provide on what a good deal looks like for your practice considering taxes and intangibles, not simply the largest payday.
Let our experienced team of Advisors help you ensure you get maximum value when you sell your business. Contact Sun Acquisitions for a free consultation at [email protected].