Keeping Your Eye on the Door…Planning Your Exit. Part III
Time to Clean House!
Now that you have an understanding of the issues involved in selling a practice, let's look at what you can do to prepare and position your practice for eventual sale.
Before you ever think about listing your practice for sale there are a number of things to do ...in other words it's time to clean house! You might compare this to getting ready to sell your home. You don't just put your house on the market; typically you make some repairs, spruce up the house and the yard. Because a clean and clutter free house shows and sells better!
The same is true for business! Nobody wants to buy a messy business or a practice that looks bad: looks bad to the eye and looks bad on paper. Here are some of the areas to examine and get in order, preferably months before ever listing the practice.
- Business and accounting records: your records must be up to date and complete.
- Medical records: make sure all records are up to date and well organized, particularly if they are paper charts.
- Accounts receivables: make sure your accounts receivable (AR) has been worked and is current; resolve any outstanding disputes.
- Office policies & procedures, employment, training and safety manuals: make sure your documentation is up to date and complete.
- Tax records: all must be up to date, organized and complete. Resolve any outstanding tax issues including employment, federal, state and local taxes.
- Inventory your medical and office supplies and equipment.
- Staffing: fill any necessary open positions.
- Clean and brighten up your office if need be. Remember first impressions are everything!
Next then, how do you go about finding a buyer for your business and what price should you ask? As you may suspect, determining the sale price for a professional practice is not an exact science. Most practices will be sold for multiples of available cash flow, annual net earnings, annual gross collections, or any number of formulas.
With respect to finding a buyer, there are many options available to you as well. These range from contacting your local hospital to getting your business listing in front of the graduating class of different medical schools, to placing newspaper and online ads.
Another venue to consider is to utilize the services of a business broker, just like you would utilize a real estate broker when selling your home. A business broker will be able to assist in setting a realistic sales price and list your business within their network.
Visit the links below to get information about the services different brokers offer and to find listings for medical offices that might be similar to yours. Please note we do NOT endorse or recommend these brokers, the links are simply included for your information.
Finally, take time to consult with both your legal and tax advisors to help you plan for and construct a favorable sale. And remember, anything will sell as long as the right buyer comes along and the price is right!