Making one of these mistakes can cost you both time and money when selling a medical practice.
Expert medical accountant Kym Nitschke explains what you need to avoid in order to have a smooth and successful sale.
After a long and successful career, you’re ready to retire and sell your practice. Or, you simply feel the time is right in the market to exit. But making one of these mistakes, however, can cost you a lot of money and drag out the selling process much longer than you expected. Watch out for these key mistakes when selling a medical practice.
1. Undervaluing your medical practice
It’s easy to underestimate the value of your practice because you may not realise just how many hidden assets your practice has. Things like a convenient location, extensive patient base and a loyal team of medical staff are hard to put a price on but they still add significant value to your practice. This value should affect how much you ask for your practice.
You can avoid the mistake of asking too little for your practice by getting a professional business valuation.
2. Being unprepared
Too many medical professionals make the mistake of coming in to sale negotiations unprepared. You need to be able to provide confident answers to any question a buyer might pose. Hesitation and uncertainty on your part can make the potential buyer conclude that your practice is too risky to purchase. As long as you know your practice inside and out and can provide confident answers, then buyers will be assured of the value of your business.
3. Not putting things down in writing
So you think you have a buyer all lined up, do you? Just remember that all discussion about purchasing your practice is just talk until it’s down in writing. Discussions alone don’t mean much in the business world. Have agreements and terms put down in writing and then signed and dated by all parties involved. This will serve as legal proof and keep your sale moving forward, minimising the chance of needless delays and miscommunication.
4. Not assisting with a smooth ownership transition
Once you sign off on the papers your practice sale is a done deal, right? Your job may not be done, however.
In all fairness to the buyer and the existing patients and staff at your practice, you should be willing to do your part in handing off ownership in a gradual way. Your continued services and advice should be a part of the value that you offer in the sale. It takes time for the practice to adjust to new ownership and the process will be much smoother if you stay on for a period of time to keep seeing patients and answering questions about ongoing care and other processes.
The potential buyer for your practice may expect to have your help during the adjustment period, even after the sale is finalised. Leaving out a proper ownership transition plan could cause a sale to go sour.
5. Letting everyone know about the sale
It is a huge mistake to let everyone know about your hopes and plans to sell the practice!
If your patients find out about the sale too soon, they might leave the practice or even follow you or other associates to a new one. Likewise, staff members could also bail out of fear for their careers. If your competitors in the area learn of your plans to sell, they may take steps that could adversely impact the value of your business while it’s on the market.
You need to keep your sale plans on the down-low until the sale is a done deal.
6. Not letting anyone know about the sale
On the other end of the spectrum, some doctors make the mistake of telling no one about the sale and betray the trust of their patients, staff and fellow associates.
Once your sale is final, the people affected have a right to know. And you have the obligation to guide and reassure everyone throughout the transition. Give enough advance notice if some team members will need to start looking for new jobs. Take steps to reassure your existing patients that they will continue to receive the same standard of quality care.
7. Neglecting legal obligations pertaining to the sale
If you’re currently still practicing medicine while running your practice, then you’re likely very busy. Add to this the insanity of trying to market your business for sale, and you can expect to forget a few details here and there.
Busy though you may be, you must be careful to not overlook your legal responsibilities in the process. If you make this mistake, you may encounter issues that slow down or stop your sale and even cost you legal fines. It’s essential to have professional advice in this area to help you stay informed and current with your legal obligations.
The best way to avoid mistakes when selling a medical practice is to get expert advice.
Contact Nitschke Nancarrow, experts in all aspects of medical accounting, finance and business. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
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