Sarasota, FL, September 05, 2012 --(PR.com
)-- Physicians sell their practices for a variety of reasons – dissatisfaction with the demands of running a business, the desire for a less strenuous work schedule, frustration with insurers, retirement. There are several steps they should take now that will help maximize the purchase price and ensure a relatively smooth transaction.
Lay the Groundwork
Start by taking a critical look at the practice’s current financial condition. Identify areas of weakness. For example, does the practice experience poor collections or weak cash flow? How do staffing levels compare to those of similar practices? Issues such as these can reduce the appeal of the practice. Sellers should deal with these issues well before they put the practice on the market.
Have a realistic appraisal of the practice’s potential worth. Tangible assets, such as medical equipment, computers and furniture, are relatively easy to value, though they generally make up only a small part of a medical practice’s total value. Goodwill is an intangible asset that can be difficult to value. But there are methods that can be used to establish a reasonable estimate.
Identify Potential Buyers
Sellers may receive an unsolicited offer. If they don’t, they should consider reaching out locally or contacting a broker who specializes in selling medical practices. An experienced broker can identify and contact qualified potential buyers.
The speed with which a sale may occur will largely depend on
the deal. Sellers may want a buy-out that will let them continue to practice as an employee. In that case, looking for a group practice, hospital, or other corporate buyer may be the best route. If the sale goes through to one of these entities, the seller will be able to continue to work in medicine without the responsibilities of ownership.
If retirement is the goal, the seller may opt for a gradual buy-in
by a physician who will take over the practice. Typically, this arrangement requires the seller to employ the prospective buyer and, under the terms of the deal, after a trial period of a year or two, offer a partnership with a documented exit arrangement for the seller. This arrangement could be in the form of a severance package.
Review All Offers Carefully
Upon receiving an offer, the seller's focus should be on the would-be buyer’s financial condition and the payment terms if the seller plans on retiring. If the seller plans to continue working at the practice with the individual or entity who may buy it, he or she should carefully review all ramifications, including transfer expenses and malpractice terms involved in the sale.
In addition to the financial and legal issues involved in the sale, sellers should also feel that they will be able to fit into the potential buyer’s organization and their advice and input will be welcomed.
Remember, whatever way the sale is structured, there will be tax implications. Suncoast Advisory Group can help secure the most tax-advantageous sale terms.
The speed with which a sale may occur will largely depend on the deal.
Medscape and MD Preferred contributed to this article.
Rick Helbing is a Certified Financial Planner who provides strategic financial planning to medical professionals, dental professionals and family business owners. He consistently has been named one of the top 150 advisors in the country for physicians by Medical Economics magazine.Telephone: (941) 375-7320. Website: www.suncoastadvisorygroup.com.