You’re approaching retirement and are looking forward to a slower pace of life and fewer demands. You might be looking for a change in your professional career. Whatever your reason, your medical practice may be the biggest hurdle in your way.
This is a common dilemma for physicians and practice administrators who are trying to sell their practices on their own. They are reluctant to hire an agent to facilitate the sale. They think, “Wouldn’t that be nice to save 10% on the brokerage fee?”
Although you may be an expert at managing your business, that does not mean that you will be an expert at selling it. There are many potential pitfalls in the business sale process that can have serious, long-term consequences if not dealt with properly. If you are looking to avoid these mistakes, a broker will help you. They can usually add between 10-15% to your sales price.
This is a detailed look at potential pitfalls when you try to sell a practice by yourself.
In determining the length of a business’s stay on the market, the most important factor is price. Inexperienced sellers will often set a price without determining the value. The result is that the price ends up being too high. Sellers who take the time and do a thorough valuation before establishing an asking price will be better equipped to protect that price and get a quicker, smoother sale. The reverse is true. Some sellers underestimate their business which could leave money you could have used to fund your next phase of your life. Texas Medical Practice Brokers uses an in-depth valuation process that will position your practice well in the marketplace.
Not Attracting Serious Buyers
For a successful business sale, it is important to pre-qualify prospective buyers. Unfortunately, many sellers are afraid of scaring away potential buyers if they don’t qualify prospects quickly enough. Only 4-5% of the buyers who contact you will actually buy your business. Therefore, it is important to pre-qualify early to ensure a seamless sale. Most sellers don’t know how to screen buyers properly or have the time. However, doing so will save you valuable time in the long run.
Not protecting Confidentiality & Not Protecting Yourself
You may be concerned about confidentiality during the selling process. You could lose your employees and revenue if it is made public that your business has been put on the market. But, it is important to promote your practice and spread the word. However, it can be very difficult to get word out that the business is up for sale. How do you make sure your ads aren’t too secretive? How do you protect confidentiality when speaking with buyers?
Our years of experience have shown us that many business buyers will do everything they can to bypass barriers that have been put up to protect you as Seller. They will try to get around confidentiality agreements even if they are working alongside a broker. They may try to circumvent confidentiality agreements or force you to share proprietary information, such as trade secrets or patient demographics. A broker can help you keep your confidential information secure and protect you and the business throughout the entire sale process.
A broker can also help you portray your business in the most professional light and protect you against potential misrepresentations to prospective buyers. You might be tempted at some point to exaggerate numbers or distort projections, or even hide problems. These kinds of misrepresentations raise red flags when potential buyers examine the financials. It can even lead to legal action.
The Transaction & Closing
Today’s marketplace is not conducive to all-cash sales. Selling for all cash can be tax-detrimental for sellers. Buyers today are less likely to pay a large amount of cash upfront and will require concessions such as seller financing, deferred payments or assistance in obtaining financing. A broker can be helpful even if you haven’t hired one to market your business and find potential buyers. A broker can help you with the complicated closing process, as well as reduce stress and uncertainty.
Documents, Contingencies, Transitions, Continuity of Business
There are many steps that you need to take in order to sell your practice. You can make mistakes along the way and lose valuable time, money, and energy. How do you negotiate and draft a letter of intent? How do you manage the due diligence process, or obtain a lease assignment? A serious buyer will likely want to meet with some of your key employees. Do you know how and when to accomplish that buyer contingency? How can you negotiate your transition from the practice in a way that is beneficial to you and the seller? Have you thought about how you can maintain business continuity during the sale if you manage this whole process?
There are many details involved in a business sale. Every detail is an opportunity for a serious mistake that could have long-term, negative repercussions.
Perhaps It’s Time to Contact a Broker
Abraham Lincoln said it best: “A man who represents himself in the sale and purchase of his practice has a fool as a client.” However, representing yourself may reduce your professional fees but not necessarily ensure that you maximize your net proceeds or secure the best outcomes. An experienced broker can help you maximize the purchase price, sell quickly, efficiently, protect your interests, allow you to concentrate on your business during the sale process, and give peace of mind that all details are taken care of.
Texas Medical Practice Brokers was established because of the need for a brokerage firm that understands sellers’ needs. Our brokers have extensive experience working and owning medical practices. This allows us to help you make the most of your business sale. Our brokers are focused on protecting you, your staff, and your legacy.
We understand how difficult it is to sell your practice. However, we also understand how stressful and conflict-ridden it can be. When you sell your business, we promise you’ll be relieved and thankful to have us as your team. We provide safety, privacy, loyalty, and support you in your journey to a new season. We can help you create a path for your practice that will leave your life’s work in good hands.