Seller FAQ
Maintaining confidentiality is a top priority for business brokers. Most practice owners do not want their employees, patients, or vendors to know they are selling their practice. At Strategic Medical Brokers, we understand the importance of confidentiality and prioritize it at every process step.
The timeframe for selling a practice varies depending on the specialty. Generally, a primary care practice can be sold within nine to twelve months, while a specialty practice may take twelve to eighteen months to sell. While this may seem like a long time, many steps are involved in selling a practice, including listing the company, finding buyers, interviewing potential buyers, writing contracts, conducting due diligence, and closing the deal. All of these steps can be time-consuming.
Transferring the lease is crucial to the success of the transaction. Completing the deal will be nearly impossible unless the lease can be transferred. The lease will have a clause outlining the landlord’s transfer rights. Often, the seller will be required to remain as a guarantor of the lease, and there may be a charge by the landlord for the transfer.
At Strategic Medical Brokers, we do not charge any upfront retainers. We will analyze your practice and guide you through the entire process. Your only obligation is when we find a buyer for your practice. We typically receive our payment at closing.
Valuing your practice is another crucial function of the business intermediary. Ultimately, “the market” determines the value of your practice. At Strategic Medical Brokers, we have extensive experience in valuing healthcare practices. While our value estimates are not “certified business appraisals,” we charge a fee for this service. However, our expertise allows us to give you a reliable estimate of your practice’s most probable selling price.
There are several ways to handle this. Often, the property is offered for sale or lease in a separate listing. However, the practice owner may retain the property, obtain a long-term lease, and earn an ongoing cash flow stream. Additionally, the property can aid a buyer’s ability to finance the practice.
Most small practices are sold, with the seller retaining cash and accounts receivable. The new owner is generally granted a working level of inventory.
In most cases, the company is sold debt-free. This means that the seller will be responsible for the accounts payable and any short or long-term debt.
The lack of good business records is the most common reason a business sales deal falls apart. We cannot emphasize enough the importance of maintaining accurate records before selling. This includes financial statements, practice management reports, or any other records necessary to prove income and expenses. Of course, the last three years’ tax returns and the previous two years’ bank statements are required.
The answer is today, no later. Even if you are not ready to sell your practice right now, you cannot start preparing too early. One of our experienced brokers will happily meet with you to help you start thinking about your exit strategy.
Buying or selling a healthcare business is a complex process. While some practices are sold without the help of attorneys and accountants, we strongly recommend that both the buyer and seller engage professionals.
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Please do not hesitate to contact Strategic Medical Brokers if you have any additional frequently asked questions about selling a company or practice brokers.
