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Buying a Chiropractic Clinic: 7 Basic Steps

Eager to buy a practice and get out on your own, but don’t know where to begin? Step one is to understand the process so you know what to expect and how to prepare. 

Buying a chiropractic clinic is a detailed process that requires months to execute. Here is a high-level overview of what that process usually looks like:

  1. Research and Plan

Start with a plan. Buyers should know what their ideal practice looks like, including the procedures they would offer, patient demographics, practice size and location. It is helpful to look at clinic listings [LINK], to see how practices are priced and what is available in locations of interest. Read more here [LINK] on how to choose a location for your practice. 

  1. Determine Your Budget 

Buyers need enough cash or liquid assets for a 10-12% down payment. Ideally, buyers will also have a credit score of at least 680 and no bankruptcies on record. The current lending environment is extremely favorable to buyers. Due to the COVID-19 pandemic, the Small Business Association is paying principal, interest and associated fees on current and new small business loans for six months. This relief is available until Sept. 27, 2020. Read more on the opportunity here. [LINK] 

  1. Evaluate Your Options 

When evaluating practices for sale, it’s most important to have a solid understanding of the financials of the practice. However, in the business of chiropractic, it is also critical to assess qualitative factors. These include the reputation of the clinic, the quality of support staff willing to stay on after the sale, and the personality of the selling doctor. Chiropractic care is personality-driven, so the smoothest practice transitions occur when buyer and seller personalities and philosophies of care are a good match. Read more about how to analyze a practice here. [LINK]  

  1. Consider Outside Counsel 

At a minimum, first-time buyers will need an independent attorney, accountant or broker to review profit and loss statements and tax returns for the practice they plan to buy. Buyers may also want to tap these services to assist in negotiation and contract writing. With any outside counsel, it’s important to find a professional who is knowledgeable in the chiropractic space, according to Kevin Misenheimer, a chiropractic practice broker with Progressive Practice Sales in Chattanooga, Tennessee. 

“Sometimes [buyers] get bad advisors. Their CPAs don’t understand the business of chiropractic, don’t ask for the right stuff and don’t understand how chiropractic practices are valued,” Mr. Misenheimer says. 

  1. Write a Letter of Intent 

Once buyers find a practice they are serious about, it’s time to submit a letter of intent. The LOI is a written, non-binding offer to buy the practice. It should include an outline of the prospective deal, including assets, price and terms, and a tentative closing date. 

  1. Negotiations and Due Diligence 

During the due diligence phase, buyers will do a deep dive into the practice financials and back office procedures. It is critical to have a crystal clear understanding of cash flow before signing a contract. Buyers do not want to sign on a practice and find out down the line that cash flow isn’t close to what they expected.  

During due diligence and negotiation, buyers should also look at the transferability of professional referrals and insurance panels, as well as any trained staff who are willing to stay. If key employees plan to leave after the transaction, the cost of hiring and training a new employee should be factored into the contract. Find more on how to analyze a practice here. [LINK]

  1. Transition 

Transitioning patients from seller to buyer is also a critical step in the sale process. Transitions last anywhere from a few weeks to a few months depending on the terms of the sale. Newer chiropractors may benefit from a longer transition and time to train with the selling doctor. Sam Reader, a practice management consultant, recommends a hands-on transition process in which new doctors begin working with patients immediately. “There are too many people that say, ‘I don’t like the look of his hair,’” he says. “I don’t like that the [new doctor] didn’t even adjust them yet. So we eliminate that. They walk out the door like, ‘Wow. I don’t like his hair, but I like him.’”

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