Selling a private practice is a huge task filled with emotional considerations, financial complexities, and logistical hurdles. A business represents years of hard work, dedication, and passion, making the prospect and process of selling a challenge. However, with the right strategies and mindset, you can overcome common obstacles and easily transition to the next chapter of your life. Here’s a basic guide to overcoming eight obstacles to selling your private practice. Knowing the value of your practice, finding the right buyer, and preparing your practice for sale will expedite the process and support your goals.
Setting a Realistic Market Value for Your Practice
Determining your practice’s fair market value is the biggest hurdle in taking it to market. Most business owners have an emotional attachment to their practice, creating an inflated sense of its worth. Simultaneously, underestimating its value could lead to financial losses. Start by seeking out expert valuation services. The right firm can provide an opinion of value, or a comprehensive, nonpartisan assessment of your practice’s market value.
Knowing the value of your practice helps you enter negotiations with confidence. An opinion of value takes into account the business’s financials, intangible assets, and market trends to establish credibility and guide the selling process to a successful closing.
Preparing Your Practice for Sale
When you sell your house, you clean it up, repair things, and add a new coat of paint to make it more enticing. Likewise, selling your practice involves preparing it so it shows its best face, financially and operationally. Here are a few tips on how to do it:
- Create a clear picture of your practice’s financial health. Prepare detailed records of revenue streams, expenses, and profit margins for review.
- Demonstrate a loyal client base increases your practice’s value. This is essential when showcasing the potential for future earnings.
- Assess areas of risk, such as reliance on a single revenue source or a small client base. Address these vulnerabilities to create a sustainable business model.
Investing in small operational improvements, such as updating your website, refreshing software, and improving your branding, can present your practice in a more polished way to justify its price.
Finding the Right Buyer
Finding the ideal buyer is its own challenge, and that person is not always whoever presents the highest offer. Find someone who shares the values and goals of your practice. Vetting buyers can be overwhelming, so here are a few simple strategies to expedite the process:
- Spread the word about the sale through your professional network. This helps you discover like-minded professionals who see value in your work.
- Seek help from professionals who specialize in connecting practice owners with qualified buyers. An outside firm can locate financially capable and well-suited buyers to take over your practice.
- Look for buyers who share your philosophy of care and management style to maintain your practice’s reputation and legacy.
Navigating Legal and Financial Complexities
Naturally, the financial and legal aspects of selling a practice pose their own challenges. From contract negotiations to the tax aspects and angles, there’s plenty of fine print to work through. First-time sellers may be especially intimidated. Just take a deep breath, and keep the following suggestions in mind:
Hiring Legal and Financial Experts
When you’re in uncharted territory, it’s best to hire an expert. Find and work with experienced financial and legal experts who specialize in business transactions. Their specialties include but are not limited to the following:
- Drafting airtight contracts
- Outlining terms of sale to protect your interests
- Navigating tax obligations to maximize your net earnings
Structuring the Deal
Consider the structure of the deal. This includes defining what occurs during and after the sale. Take time to understand the different deal structures and what each offers so that you can select one that will work best for you. This is another example of when it makes sense to hire an expert. An M&A expert, like a business broker, can provide invaluable professional advice, save you time, reduce your stress, and garner the best possible terms for the deal.
Managing Emotional Attachments
We’re all only human. It may be a business, but emotional attachment to the place you’ve built up, operated, and overseen is to be expected. Cherish the memories while controlling your emotions. Here are a few techniques on how to manage that sudden wave of grief, pride, anxiety, and other overwhelming feelings you may experience when selling your business.
Focus on Your “Why”
Why are you putting your practice up for sale? Is it because of retirement, or do you have a new professional goal? Do you want to spend more time with friends and family? Maintain perspective by remembering all the good reasons for selling.
Plan for the Transition
While planning for the sale, think about what you’ll do after the sale, too. Reduce feelings of loss and anxiety by looking to the future and planning what you’ll do when you get there.
Seek Support
Know anyone who’s gone through the process of selling their practice? They’ll have insights and suggestions on dealing with the progression. Talk to peers, mentors, fellow professionals, and advisors about what they did. Their encouragement helps you stay grounded, grants clarity, and reduces the number of surprises. 
Communicating With Clients and Staff
A business only works because of the people who run it and the clients they serve. Communication is the key to doing business, so keep the lines open between you, your staff, and your clientele. Effective communication alleviates concerns, maintains trust, and ensures goodwill. It also helps to retain staff and customers who are integral to the practice’s success while preparing them for what comes next. Here are the best approaches:
- All communication should take place at the appropriate time, ideally after finalizing the sale agreement but before the public announcement.
- Be clear and honest about the reasons for the sale and how it may affect staff or clients.
- Address concerns and convey confidence in the new ownership for a smooth transition.
Thoughtfully managing this period of change preserves the trust and relationships you’ve built through the years.
Overcoming these eight obstacles to selling your private practice is a challenge. However, by addressing these issues, you experience a less-fraught sale. Need help with the future of your practice? Contact Private Practice Transitions today!
