Preparing to sell a professional practice you’ve maintained for years is a significant milestone, and receiving an offer can be exciting. However, before you sign any contracts, ask yourself if it’s wise to accept the first offer right away. While it’s tempting to close the deal quickly—and the initial offer may indeed be the best you’ll receive—it’s crucial to step back and evaluate the broader implications of the sale. If you’re wondering whether you should accept the first offer to buy your practice, this guide will help you explore the pros and cons and important factors to consider.
Why the First Offer Feels Tempting
Receiving the first offer after deciding to list a business for sale is proof your practice is marketable, and it may bring immediate relief. Often, accepting the first offer promises a quick and hassle-free sale. It removes the guesswork, saving you precious time. Seeing a tangible offer may make you feel like you’ve accomplished the goal of preparing your business for sale.
Some practice owners may worry that turning down the initial offer reduces the possibility of other offers coming through. However, before jumping to accept, it is crucial to address the potential downsides and evaluate whether the offer aligns with your goals.
The Risks of Accepting the First Offer
While the first offer might seem appealing, there are downsides to accepting it without further consideration.
Leaving Money on the Table
View the first offer as an opening bid—it may not reflect the full value of your business. Buyers frequently test the waters with a lower offer, hoping you’ll accept it without negotiation.
Misalignment of Goals
If the buyer has expressed plans to make drastic changes or has a background that doesn’t suit the nature of your practice, your legacy could be at risk.
Lack of Competitive Bidding
When you accept the first offer, you risk missing the opportunity to test the market further and create competition among potential buyers. A competitive bidding process may lead to better offers, both in terms of financial gain and fit.
Overlooking Key Terms
An impressive first offer swiftly breaks down when other terms and stipulations come into play. Transition timelines, payout structures, and contingencies can affect whether the deal truly benefits you. In short, taking that first offer could cost you!
Key Factors To Evaluate Before Accepting an Offer
When you list a business for sale, you’re not just selling an asset. You’re selling a piece of your personal investment and history with the practice, and the offer shouldn’t be a fixed amount for physical goods and structure. Years of dedication, reputation, and client trust have built up your practice. Therefore, evaluate any offer while remembering the following factors:
Business Valuation
Understand the true value of your practice. Enlist an expert auditor to provide an accurate business valuation and ensure that offers reflect your work and financial worth.
Buyer Compatibility
Consider the buyer’s background and intentions. Do they have experience in running a similar practice? Do they share your commitment to employees and clients? If it does not seem like a good fit, you may want to reconsider selling to them.
Future Plans
Assess the buyer’s plans for the business post-sale. Will they retain the current staff? Are they planning a smooth transition for clients or patients? Are they preparing to make drastic changes that could reflect badly upon you and the practice? Explore how they treated previous businesses if they’re less than forthcoming.
Offer Other Terms
Look beyond the sale price. Review factors such as payment structures (upfront versus installments), responsibilities during the transition, and contingencies tied to the offer.
Benefits of Working With a Broker
Brokering the sale of your practice can be tricky. Don’t hesitate to enlist the help of an experienced business broker for a smooth sale. At Private Practice Transitions, we specialize in connecting sellers with the right buyers while maximizing the value of the sale. Brokers also provide the following benefits:
- Brokers assess whether the offer is competitive based on current market conditions and industry trends.
- Brokers expertly negotiate on your behalf, usually resulting in more favorable terms, financially and operationally.
- Brokers thoroughly vet potential buyers to uphold your practice’s values and operational standards.
- Brokers guide you every step of the way, from marketing your practice confidentially to managing closing processes.
What To Do If the Offer Isn’t Right
When it’s obvious that the offer is unacceptable or just doesn’t feel right, you are within your rights to politely decline and walk away. Follow these steps:
- Respectfully communicate your reasons for declining. Many buyers are amenable to renegotiation if they understand your concerns.
- Reflect on what you’d like to achieve with the sale. Are you prioritizing financial gain, finding the right buyer, or preparing for a smooth retirement? You may realize the first offer was actually a pretty good one.
- Turning down that initial offer doesn’t mean it’s all over. Continue to market your business and target other buyers who are more in sync with your needs.
Balancing Emotion With Business Decisions
Sometimes, it’s not about money or deals. Selling a practice you’ve put your time, heart, and soul into is an emotional event, and all of those feelings may cloud your judgment. When balancing emotional ties with strategic decision-making, step back and reflect on the big picture and your legacy. Then, consult reputable brokers, legal advisors, and mentors who can evaluate the offer objectively. Speaking with a friend or colleague who’s gone through the process of selling may also provide comfort and clarity.
Finally, be patient, and don’t rush the process. The right offer should align with both your financial and personal goals.
Are you still wondering if you should accept the first offer to buy your practice? There’s no right answer, but generally it’s wise to assess whether the first offer truly is the best offer. When selling a practice, find and partner with an experienced broker at Private Practice Transitions. We offer the tools, insights, and access to top buyers. Contact us today for a consultation!
