How To Make Your Medical Practice More Appealing to a Buyer
By Reed Tinsley, CPA, CVA, CFP, CHBC
I understand that there is a lot of (unnecessary) trepidation around selling your medical practice. Timing is everything. At some point, you will consider selling your medical practice. Whether it is today, in 3 years, or in 25 years, consider these steps to make your practice as attractive as possible to potential medical practice buyers. Getting in front of the sales cycle and positioning your practice properly can change your ROI in positive ways.
Work with a Qualified Medical Practice Broker
Find a qualified medical practice broker that you like and trust and work with them. Someone who is experienced and best-equipped to ensure that:
- Your practice is accurately priced to move, and you are neither leaving money on the table NOR pricing yourself out of a sale
- Help you discretely market your practice
- Help manage qualified buyers.
- And, help you manage the larger medical practice brokerage
If you have not sold a medical practice before, I strongly recommend that the first time you try to do so is NOT with your life’s work. A broker’s commission is well worth the guidance and support he or she provides.
Organize Your Finances
The easiest way to be more appealing to potential buyers is to have clean and organized financials and other financial information (ex. billing and collection data). During negotiations, buyers will want to see why your medical practice appraisal and why it is valued at its listed price. In order to prove that, you will be required to share some financial information. By being prepared, you have become significantly more attractive to a buyer who might be interested in investing in your medical practice.
Prepare a Proper Story for Your Financials
A buyer is bound to judge your practice quickly based on your past performance. The first things they see or read will naturally be their first impression so you need to make sure your financial story is clear. For instance, if you can explain the ebbs and flows of your most profitable and least profitable years then a buyer can be more trusting of the value and potential success of your practice. If not, it will just look like you sometimes do not do well financially, and that does not bode well for confidence in future success.
This is information that needs to be communicated with your medical practice broker so he or she can represent you honestly and thoroughly as buyers reach out. Remember, they are your first line of defense. It is their job to make sure that random buyers calling about your medical practice can actually make an offer on your practice. And to do that, we need to first be able to entice them.
Highlight Your Strengths
In order to attract some of the best medical practiced buyers, you need to understand how to properly highlight your strengths. The right buyer will want to know how the medical practice can continue to be successful without your leadership. A practice that relies too heavily on current ownership skills could be seen as risky to a buyer. Therefore, you need to present how and why your medical practice is profitable beyond the personal goodwill, personal skill, and personal relationships of the physician or owner.
In essence, highlight the strengthens that will continue long into the future after you have left it behind to sip Mai Tai’s on the beach, play ball with your grandchildren, or start that next passion project!
Find the Right Medical Practice Buyers – Don’t Wait for Buyers to Come to You
Selling a medical practice is not like selling a house. There are websites that a broker will use to advertise your medical practice. However, the medical practice broker should never recommend simply advertising online and waiting for medical practice buyers to reach out. The wait could be a long one. A proactive sales process is much more likely to make a sale happen. When selecting to use an experienced medical practice broker, you have a much better chance of getting the right medical practice buyers to the table by leveraging the medical practice broker’s extensive network. This is where experience can be the key to success.