When it’s time to sell the practice, chiropractors want to close the deal efficiently and get the most value possible. However, many first-time sellers find it’s easy to unknowingly get in their own way. Avoid common missteps with the following tips:
Do Clean Up Your Books
Buyers will want to review profit and loss statements and tax returns for at least the past three years. Get a head start by cleaning up expenses a few years ahead of the sale. “A lot of doctors are extremely aggressive. They try to write everything off, and they try to bury a lot of that, under a section on their P&L called advertising,” says Sam Reader, a chiropractic consultant. Many write-offs can be added back to the profit line before a sale, but the bank will challenge excessive add backs.
Don’t Sell for Potential
Potential won’t sell the practice. Chiropractors who have the luxury of planning should get their practice appraised a few years before their planned exit. This will help provide a benchmark, and if it feels too low, they can work to find efficiencies before the sale.
Do Advertise Across Multiple Platforms
Buyers come in many forms [LINK] and a multi-platform, multimedia advertising strategy will move your practice faster. List your clinic on various online platforms and classified listings. Advertise on chiropractic college websites. List it in trade journals and magazines. Many sellers even use direct mail. “There seems to be a high pass along rate when you do direct mail,” says Kevin Misenheimer, a practice broker with Progressive Practice Sales in Chattanooga, Tennessee. “That has been really effective for us to help people who have a tight timeline.”
Don’t Invest in New Equipment and Upgrades
Practice valuation is based largely on the net cash flow of the practice [LINK]. This means fancy equipment will not make or break a sale. Plus, the office upgrades a seller thinks are important may not even be what a buyer is looking for. Equipment should net 2.5 to 3 times its value.
Do Change the Name
If you’re working at an eponymous clinic it may be time to consider a name change. Something as simple as updating a name to reflect the local community adds significant intrinsic value for the buyer.
Don’t Expect to Ink the Deal and Fly to Bali Tomorrow
Assisting the buyer with the transition is a major selling point in many transactions. “Sometimes there are sellers that have this idea that they can hand off the keys and move to Costa Rica,” says Mr. Misenheimer. “They’ll have a really hard time selling their practice.” Plan to offer at least 30 days to transition patients and show the ropes to the incoming chiropractor. Read more transition tips here [LINK].
Do Work With a Broker For More Assistance
Due to health concerns, death, relocation or burnout, some sellers need to move quickly. The most efficient way to sell a practice is to enlist a broker or consultant who specializes in selling chiropractic clinics.
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