Preparing to Sell your Practice - What you need to do before you contact a Broker
By: Stacie M. Dowling, Esq. | October 17, 2017
Selling a practice requires planning and preparation long before it goes on the market to ensure not only that the Seller finds a suitable Buyer but that the Seller is able to maximize the value of the practice as well. Several years prior to selling the practice, a Seller should objectively evaluate his/her practice to identify both its strengths and its weaknesses, allowing for sufficient time to ameliorate the shortcomings. Experienced Brokers can be a valuable resource in examining the practice and objectively recognizing those deficiencies that could decrease the value of the Practice. Some significant areas to address are
1. Associate Employment Contracts. A Seller should ensure that all associates are under a written contract with a sufficient restrictive covenant that protects the practice. If possible, a Seller should try and have an assignment provision built into the contract that would allow the Seller, upon the sale of the practice, to assign the contract or at a minimum assign the restrictive covenants to the Buyer. A specialty Attorney can assist you with these important contract needs that will protect the Seller presently and in the future.
2. Technology/Social Media. Many Buyers and patients today are well versed in all aspects of technology and social media. The Seller first needs to obtain a modern, user friendly website that informs and assists patients with their needs including online forms and even the option to make appointments. Services that send texts and emails to confirm appointments also build value. The Seller then must establish a presence on sites such as Facebook, Twitter, etc. providing office news, updates and interesting facts. Most adults now actively use these social media sites to connect with friends, businesses and service providers. Finally, a Seller should review internet search engines to evaluate his/her online reputation. Sites such as Google have mechanisms for patients to leave reviews. A Seller needs to know what patients both past and present have said about the practice and should quickly respond to any negative reviews to potentially lessen the impact of the feedback. Many potential patients use these reviews and ratings to decide which provider they will visit and therefore they can significantly affect the practice value.
3. Office Décor/Equipment. When selling your practice, your office, the waiting room, examination rooms and even the bathrooms should be clean, tidy and should look updated. Spaces should be well lit and should be free of clutter. Buyers look for practices with modern furniture and fixtures, newer equipment and technology. Consultants and even interior designers may offer free consultations to discover what can be modernized to enhance the space.
4. Practice Overhead. Offices that are organized and efficient are attractive to Buyers. Work with specialty CPAs to review your books and to determine if your expenses are streamlined and if your accounts receivables are manageable. Offices with higher collections and revenue growth sell faster and attract more Buyers.
5. Attracting New/inactive Patients. A Seller should consider creating a business plan to entice new patients or to bring back inactive patients. Referrals from active patients, promotions from insurance providers and even connections from local businesses can increase the patient base which in turn increases value. A Seller can even show their appreciation by treating patients to some fun or educational events including giveaways, or planned patient appreciation days. Patients that feel cared for are more willing to stay at the practice, and refer their friends and family. You can also consider incentivizing employees to motivate them to help improve and grow your practice, not just through referrals, but in all facets of your operation.