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I want to sell a clinic but don't know where to start
1. Are you sales ready?
This is a business and the sale should be a business transaction, right?
Not all the time. In many cases I see practitioners that have sat in their chair in the same room for 35 years or so; watching their patients grow up and go on to have their own babies, in some cases grandchildren. A big part of who they are is being the town’s GP and trusted health advisor.
For many, they don’t want to retire, being witness too many of their patients retire and then relatively quickly lose their mental or physical faculties and pass away. Most GP’s don’t want to hang up their stethoscope for fear of this happening to them and in the process, losing their standing and respect in the community.
Doctors in many cases need to be encouraged to take up an interest outside medicine if they don’t already have one such as flying lessons, gardening, bridge or golf. Many young buyers would be delighted for the original practitioner to remain at the practice after selling; maybe reduce their hours to allow the commencement of their hobbies, but to keep seeing patients.
This way, the GP still feels a part of the industry that has been their adult life focus whilst being assured that the patients are being looked after by a capable GP who will continue the legacy of the practice well into the future. To start thinking about a transition, the doctor needs to think about how this can be structed to enhance his or her life without a dramatic shock to the system of going from a busy, full time case load with some on-call at the local hospital to an immediate retirement.
2. Is the practice sales ready?
I have sold many homes over my years, and always spend some money at sale time to make them as attractive to buyers as possible with a sensible budget. When it is time to sell your business, please remember that it needs to be presentable, from the exterior (grounds and carpark) and interior (waiting area, reception, store rooms and CR’s) to the transparency and availability of current financial statements.
Many times, I see financials that have been created by a genius accountant using legitimate tax minimisation strategies which make my job a lot harder as a broker, trying to sell a practice showing low to no profit.
Buyer want to see normalised accounts for the business that they are looking to buy and if this means that you must undertake another lodgement of your documents to another accountant, then so be it. This preparedness for sale will reduce the time your business is on the market, stop the ‘tyre kickers’ that are looking to make a low-ball offer on a business showing no profit when all parties know that this is not the truth.
Allow your transition out of the business to be less traumatic for you as all the hard work will have been done before we bring the business to market, not whilst you are still trying to work full time, liaise with your accountant, show buyers through the clinic, negotiate with lawyers over offers etc.
By being prepared for the sale, not only can we get a faster sale, but we’ll potentially get you a higher sale price as there are no questions (or perceived risk areas) that the buyer or their accountant/trusted advisor/lawyer will be able to identify.
3. Do you have a broker you believe in and trust?
When you are emotionally, physically and financially ready to sell, make sure that you choose the correct broker to help you through this sales process. When you are selecting a broker, you need to ensure that you can work together as it might be a 6-month journey you go on together.
Your broker needs to be accessible and knowledgeable about your industry. Why get a generalist broker to sell a speciality clinic as they potentially don’t have the contacts in the medical field that they have built up over years in the industry? Your broker needs to be a great communicator and negotiator; always working for you as the vendor to get you the best price for the business you have worked hard to build up.
They need to be licensed in the state in which you are selling and legally able to sell your business and the building if you won the freehold and wish to divest that as well. Your chosen broker needs to be ethical and trustworthy; are they a member of the industry body being the Australian Institute of Business Brokers that ensures their CPD and currency is maintained?
Do they have a network of value-add alliance partners that they can call upon at any stage of the process; whether it be an interior designer for a makeover, or a medical accountant; a fixed fee lawyer to an immigration agent to assist you with additional Doctor recruitment to increase the robustness of your practice, pre-sale.
Contacts in these ‘bolt-on’ business can save you time, increase the desirability of your practice and at the end of the sale; improve the saleability of your business. In addition, as the broker works with both the buyers and the sellers in this transaction, it is up to the broker to validate that the buyer will be successful in obtaining finances in a timely manner.
So, to recap, find a trustworthy broker to align yourself with for the duration of the sale who can support you (and your buyer) every step of the way.
I met today with a business owner who wants to settle in about 3 years’ time so it’s never too soon to start considering options and identifying your support network!
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Written by Sally Stuart
GP Clinic Sales and Business Brokering