How To Sell Your Medical Practice

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Half of all Medical Practices Don’t Sell: How to Make Sure Yours Does

It’s an unfortunate reality, but true: only about half of all medical practices that are listed on the market end up selling. In some cases, this is truly because the practice doesn’t have value, but in many cases, it’s because the seller doesn’t go about marketing their practice properly. We want to provide tips to ensure your practice isn’t one of the unfortunate ones that never sells. 

But first, let’s back up a step. Who is it that even typically does buy practices? Since Obamacare began, hospitals have been the top acquirers of private practices. They’re also often the easiest purchasers to deal with.

But the downside to selling to a hospital is that the purchase price is typically lower. A hospital will only pay for the fair market value of the practice’s assets and won’t take into account any intangible value. This has its roots in avoidance of government charges against the hospital paying for referrals.

Beyond hospital purchases, venture capital and private equity groups will often give you a more lucrative sale for your practice, but they are very selective about a practice’s specialty, and their purchase terms may be less advantageous to you.

For many practice owners, a dissatisfied physician re-entering private practice or a physician relocating to the area are often the best candidates to purchase your practice. Or, perhaps, the best buyer is someone who is currently your competition! 

Why You May Want To Sell Your Medical Practice

You’ve devoted so much of your life and career to your practice, wouldn’t it be great to reap a financial reward that could launch you into your next season of life? And if you simply close down your practice, you will have to pay an ongoing expense of custodianship for all your patient records – maybe even into the tens of thousands of dollars!

In that case, it may be better to even pay a colleague to take over your practice rather than incur those expenses.

How Do You Sell Your Medical Practice?

How then, to go about doing everything in your power to get your medical practice sold? We’ve got you covered with six important tips.

Tip #1: Plan Ahead

The first time you even consider exiting your practice, you should start planning for a potential sale. There is a lot that goes into preparing your practice to sell, and the sooner you start getting things in order and bringing on your professional team, the more prepared you will be to sell.

If a great opportunity to sell arises due to a perfect candidate or advantageous market condition, you want to be ready. Part of planning ahead means ensuring all your numbers and financials are in order. Take time to make sure your taxes and financial statements are cleaned up, and that all your financial ratios are healthy. 

Tip #2: Keep Growing

Whatever you do, don’t slow down. Keep making efforts to grow your practice and build an ever-greater competitive advantage. A growing practice will be much more attractive to a buyer than one that has been stagnant and help you get top dollar for your sale

Tip #3: Know What Your Practice is Worth

Overpricing is the top reason businesses don’t sell. We can’t overemphasize the importance of getting a professional valuation. This lets you price your practice competitively and then be well prepared to defend that price to potential buyers. Learn more about practice valuation here, and see why it’s perhaps the most important thing to get right. 

Tip #4: Clean Up Your Physical and Online Presence

Although the first thing most homeowners do before selling their house is clean it up, most businesses skip this step. But a tidy and organized physical space will make your business much more attractive to potential sellers. Consider spending a little money to modernize your office with fresh paint, carpet, or furnishings if needed.

It’s also a smart idea in this digital age to make sure your practice has a proper online presence. Make sure your practice has a website, and better yet, invest in some search engine optimization to make sure your practice comes up in internet searches. 

Tip #5: Prepare Your Financing

In most cases, both the buyer and the medical practice must qualify for the loan. Getting your business pre-qualified for a bank loan at your valuation price will help a sale move more quickly and reduce low offers.

Tip #6: Start Bringing on a Team of Experts

To ensure a smooth sale where you are fully protected and your sale potential is maximized, you’ll want to start researching who you want on your team of professional advisors. At a minimum, you’ll want an experienced medical practice broker, certified public accountant, and an attorney. But remember, many professionals in these roles don’t have significant experience working with healthcare business sales. It’s important to interview your potential team and vet them well. 

Here at Strategic Medical Brokers, we are trusted partners to medical practice owners who want to ensure their practice has the best chance of selling. Nationwide, only 20% of practices put on the market end up selling.

We have a track record of selling 65% of the practices we work with. You have put years or even decades of work into building your practice. Let us help you make sure those years of work pay off and help launch you into the next season of your life. 

We’d love to have a discovery call with you to learn more about your practice and how our services could help you see the outcomes you desire for the sale of your practice. Get in touch by phone or email today! 

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