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Finding the right Buyer for your Medical Practice

Finding the right Buyer for your Medical Practice

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How to Find the Right Buyer for Your Medical Practice

Selling your practice involves a lot more than placing an ad. You’ll need to prepare your business for sale long before you even write the ad, and devise a strategy to help you reach the right prospects.

The easiest ways to attract a buyer will find you the wrong buyers- or no prospects at all.

Anyone can list a business for sale on a generic website, tack up at flyers at colleges or place ads in trade publications. All of these methods are easy and anyone has access to the. They may bring you some prospects, but it’s likely they’ll be window shoppers who will waste your time.

The best way to sell your medical practice starts long before you place any ads. Prepare the business for sale before contacting any potential buyers. Write a non-disclosure form, and have prospects sign them before any negotiations take place. You also need to figure out how much your business is worth.

Overpricing your practice will dissuade many qualified buyers; underpricing it will attract lots of window shoppers. You need to ask yourself the following questions as you prepare your sales plan –

  • Are you selling the entire practice or just its physical assets?
  • When you sell the company, will the new owner keep your employees or hire new staff?
  • Will you stay on as an employee or advise the new owner during the transition period?

Write a one or two page executive summary expressly to sell the business.  Describe the practice, its assets, location and why you’re selling the business. Explain exactly what the buyer will receive after purchasing the medial practice. Have a financial forecast ready to show potential buyers that the practice will continue to attract patients and show consistent financial results in the future.   

Why Rule of Thumb Valuation Doesn’t Work

Some doctors believe they should charge 60 to 70 per cent of the practice revenue. Buyers will want to know how profitable a practice is before buying. If they are deciding between a practice that’s 50% profit and on that’s 60% profit, they’ll always take the one with 60% profit.

The revenue approach is easy, just like placing on generic websites is easy. A quick, rule of thumb approach to valuation usually gives you poor results, just like looking for buyers the easy way.

Using Multiples to Determine Practice Value

There are many ways to value a practice, and multiples are one of the most popular. There are several multiples you can use to determine the value of your practice. They include price to owners’ equity, price to EBITDA, price to EBIT, price to net income, price to total practice assets and price to gross profit. Some experts recommend using several of these formulas for the most accurate selling price. You can average all of the estimates to get a sales price.

After determining the business value using each method, the average will give you the selling price. Other valuation methods include the Capitalized Excess Earnings Method, which includes a valuation of business goodwill to determine the practice sale price. The Multiple of Discretionary Earnings method is excellent for figuring the value of professional, owner-operated businesses.  It includes scores for many areas of your practice, which will help determine the final price. The business factors examined are:

Earnings track record

Location

Market concentration

Nature of business

Desirability

Ease of operation

Industry growth prospects

Employees

Management

Business growth prospects

Deal financing

Competition

Customer concentration

Product/service concentration

Once your business valuation and summary, you can write your sale ad and work with a business broker on the best way to attract prospects. Your broker may already have contacts in the local medical community and bring certain prospects to your attention before even placing the ad. The broker may also know of specialized websites or publications that feature for sale ads for medical practices.

How to Find a Broker for Your Medical Practice

Finding places to advertise besides generic websites and trade journals can be difficult without the research methods and expertise of a qualified businesses broker. You need to talk to several brokers before deciding on the right one. Make sure the broker knows how to value and sell a medical practice, not just generic businesses.

If you need to hire a business broker, 1-800-Biz-Broker can help.  The site provides information about business brokers throughout the United States. Research business brokers in your area and read reviews from business owners who have hired them. Contact several brokers and compare their rates and experience before deciding on the best one for you.

Here are our current listings, businesses for sale.

Here are are our recently closed deals.  Just Sold Businesses.

Thinking about selling your medical practice or business?  You should start with a Business Valuation.  Contact us today.

 

10 Tips to Sell your Medical Practice

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10 Tips to Sell Your Medical Practice

Selling a medical practice takes expertise and proper planning,  Before you put your medical practice up for sale, consider the following points so you can attract the right buyer. Knowing as much as possible about how to sell your practice, even before you contact a broker, will make negotiations smoother and result in a higher price and better terms.

  1. Stay on as an employee/physician with the new owner

If you decide to sell your practice to a hospital, the buyer may want you to continue on indefinitely as a full-time employee. You will have to negotiate two different agreements in a situation like this – one to sell the practice, and another to address the terms of your employment.

Once you sell your practice to a hospital, the business may not have the same revenue stream. Hospitals may not be as adept at billing and collections as a private practice, and this results in a weaker salary for you and other staff members. Therefore, it’s crucial to negotiate salary based on your job performance using relative value units or RVUs. For example, if you produce 20,000 RVUs a year, your income after taxes is $400,000, or $20 per relative value unit. RVUs allow you compensation to depend on your performance, not the overall performance of the new practice.  

  1. Upgrade your practice

If you have chairs, equipment or a reception desk that looks outdated, spend a little time and money on modernizing them. Your practice should contain the best, most up-to-date equipment you can afford, and furnishings should be well-kept and attractive, but comfortable. You want to show bidders that you care about your practice and patients by offering a first-class experience. An upgraded business will help fetch you a higher price and provide you with several potential buyers.  

  1. Offer marketing services to the new owner during transition

As a condition of the sale, you can continue in the practice for three to four months and help the new physician with patients. The stipulation to continue with the practice temporarily exhibits goodwill and adds value to the business. This approach is a form of marketing you’ll offer the new doctor. It will also help ease the patients into trusting the new physician, since you will be there during the transition.     

  1. Streamline daily operations

Go over your books and find places where you can cut costs without affecting the quality of your practice. Compare your current billing and pay rates with that of similar practices and change them, if necessary. Adjusting pricing will improve your bottom line and attract higher bids. A medical practice with steadily increasing billings will sell for much more than one with stagnant income.

  1. Convert paper charts to EHR (electronic health records) before the sale

Buyers are more likely to show interest in your practice if you have already converted to a digital or EHR system for patient records and other information. Changing over to a digital system will add to the expense of buying the business after the fact. Most buyers don’t want to deal with converting to an EHR system on top of buying a new practice.

  1. If you own the facility space, you’ll need to make two sales

If you own the building or office space where your practice is located, you’ll need to make two separate sales – one for the practice and one for the building or office. There are three potential ways to deal with this double sale.

You can sell your practice and rent the space with an option for the new practice owner to buy within a specified period of time. If the doctor doesn’t buy the space, you can continue to own the property and collect rent or sell the space to a new landlord. You can also sell the practice and turn over rent collection to a property management company.

If you are moving out of the area, sell the practice and the building or office. The physician who buys the practice may not want to buy the building as well, so you may need to find a separate buyer for the office space or building.

  1. Talk to your staff

Let your staff know about your plans to sell to avoid employees “jumping ship” because they fear for their jobs. When you choose a buyer, let the staff know if they have the option to be employed by the new owner, or any other choices they may have.  

  1. Contact more than one bidder

Let local medical groups and solo practices know that you are selling your business.

You should also contact hospital administrators may be looking for practices to purchase. If you are considering selling to a hospital, remember not all hospitals may want to keep you on as a physician.

Contact as many doctors and hospitals in your local area as you can, to increase your chances of finding the right buyer sooner.

  1. Determine the dollar value of your practice

One of the best formulas for determining the value of your medical practice is to add hard assets, cash, accounts receivables, and intangibles such as goodwill. Once you’ve figured out you cashflow after operating expenses and physician compensation, determine the needed rate of return on investment (ROI). Divide the cashflow amount by the ROI to get a ballpark figure for the value of the practice.  

  1. Find the Right Broker

Selling any business can be tough, but a medical practice offers several unique challenges. Determining the right valuation for your practice can be frustrating if you don’t have an experienced broker to help you. Selling to a hospital adds another level of negotiations to a sale.

Let the staff at 1-800-BIZ-BROKER handle the details of selling your practice so you can concentrate on treating patients. Call us at  1-800-BIZ-BROKER or visit our website at www.1800bizbroker.com to find out how we can help you sell your medical practice to the right buyer at the right price.  

Here are our current listings, businesses for sale.

Here are are our recently closed deals.  Just Sold Businesses.

Thinking about selling your medical practice or business?  You should start with a Business Valuation.  Contact us today.

Selling your Medical Practice to a Hospital: What You Should Know

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Selling any small business is tough, but selling your medical practice will present their own unique challenges. Negotiate the best terms for sale of your medical practice to a hospital by hiring a business broker.

More hospitals have been buying medical practices in recent years. This trend may be due to rising costs, the drop in reimbursement rates, and other conditions that are unfavorable to owning a solo practice. Hospitals acquire cardiology, urology, OB/GYN, and primary care physician practices, among others, giving physicians the opportunity to earn a steady income without the hassle of running a private medical office.

Hospitals make money on inpatient fees from acquired practices. These fees are greater than the reduction in professional charges. Cardiologists and some other specialists will make more money billing services via the hospital outpatient department than they could in a solo practice.  

If you have considered selling your practice to a hospital, you should think about the pros and cons of becoming a hospital employee, and the impact it will have on your career and finances. Most importantly, you should learn how to negotiate the best deal possible when selling your practice to a hospital.

Here are a few common questions you should ask before selling your medical practice to a hospital.

What Will Happen to Your Staff?

During sale negotiations, consider what will happen to your staff. Will the hospital hire them and provide jobs in that particular hospital or in another part of their system? If not, you will need to make other provisions to ensure your trusted medical and administrative staff have access to jobs similar to the ones they held at your office

Will the Hospital Add More Doctors to My Practice?

A new doctor will bring in more patients to your business, but you should know how the hospital plans to deal with compensation for additional physicians, and how the extra doctor(s) will affect workload and productivity.

Will You Assist in Making Decisions for the Hospital-Based Practice?

Define how much power you will have in overall decision-making for the business and medical ends of the practice. The hospital management may have the authority to make certain decisions you were used to making on your own, and this may take some adjustment on your part.

To a certain extent, though, the hospital administration will work with physicians to make important decisions regarding patient treatment procedures and daily operation of the practice.

How Will The Practice Be Managed?

Your practice may be one of several managed by an individual appointed by the hospital.  In some cases, each acquired practice may have its own manager. Make sure that the person managing your practice knows about the daily business operations of a medical practice as well as the hospital as a whole. A hospital and a medical practice need different management techniques.

Negotiating Sales Documents

When you sell your medical practice to a hospital, you need to take special care negotiating restrictive covenant and physicians’ right of repurchase. Obviously, all aspects of the sales documents are important, but improper terms regarding these two subjects can cause you problems once your practice is officially owned by the hospital.

Covenants

After your practice is sold, the employment agreement with the hospital will have several covenants. They include, but are not limited to:  

A non-compete covenant, which stops you from practicing medicine for a certain amount of time in a particular region after you are terminated from hospital employment,

A non-disclosure and confidentiality covenant, which may prevent you from accessing patient medical record once you are no longer employed by the hospital,

A no-pirate covenant, which states that you can’t employ or solicit employees from the hospital practice after termination, and a non-solicitation covenant, which prevents you from soliciting patients from the practice after you are terminated.

You need to understand how these covenants will affect you if you leave the hospital’s employ. Some physicians may not want to give up all their rights to patients and practice employees if they are terminated, while others doctors, (especially ones who are closer to retirement age), may not be concerned with these covenants.   

Right of Repurchase

This contract term deals with your right to buy the practice and its assets at the end of the hospital contract. If you don’t negotiate a beneficial renewal agreement with the hospital, you will be unable to have access to patients or employees. You’ll need to start over with a new practice, equipment, employees and find new patients.  

Regardless of how positive initial employment with the hospital may be, there is always the chance you will want to return to a solo practice. Negotiating the right to re-purchase will give you this option.

Call 1-800-Biz-Broker today, or visit their website at www.1800bizbroker.com to learn more about how to sell your medical practice for the to a hospital for the best price while protecting your interests.

Here are our current listings, businesses for sale.

Here are are our recently closed deals.  Just Sold Businesses.

Thinking about selling your medical practice or business?  You should start with a Business Valuation.

Just Sold | Medical Practice $2.5M

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After some hard work and a few saves, we are happy to announce that we have sold another business!  This medical practice in Claremont was established for over 20 years.  The doctor was ready to retire and we found the perfect buyer to take this business well into its next decades.  We wish the the Buyer and Seller very well!!

What did we learn?  What can we apply to future successes?

  • Preparation!  Getting the business tax and financial statements from the doctor’s CPA and properly auditing them for discretionary earnings was key in establishing AND defending its value.
  • Teamwork –  Aligning the seller, CPA, bank financing and my team with the right information and goals was crucial to quickly finding and qualifying the right buyer.
  • Financing –  In this case, financing was key to maximizing full value for the seller.  We secured two sources (need to have back-up!) to finance this deal at less than a fixed 5% rate for a 10 year term… WITHOUT real estate!
  • Buyers are plenty!  The medical sector is HOT right now.   As long as the business financials are in good order, there are many institutional and individual buyers in the field.  Right now, we have at least three qualified buyers, know any doctors looking to retire?

We are always looking for quality business sellers to represent.  We are Business Brokers.  Please call us anytime.  1-800-Biz-Broker

Here are our current listings, businesses for sale.

Here are are our recently closed deals.  Just Sold Businesses

Thinking about selling your business?  How about a Business Valuation?

Just Sold – Physical Therapy Practice

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Happy to announce that we have just SOLD a Physical Therapy Practice in Orange County! Of the 100s of inquiries I received, it took about 10 months to find the right buyer for this business. More importantly, we received over 18 qualified buyers looking for this type of business.

OPPORTUNITY for other Physical Therapy practices:  Have you been thinking about selling your practice?  If so, I implore you to give me a call. Let me offer you a complimentary Business Valuation. I can promise you the following:

  • An honest opinion of value, based on numbers and actual sales for comparison.  
  • No pressure or obligation to move forward with a listing.
  • No cost for the business valuation.
  • If you do decide to list your business; I have actual, qualified buyers looking to buy.

Please give me a call in confidence or send me an email, I will be happy to answer any questions.  

Check on our progress this year!  www.JustSoldBiz.com

Original Listing:

Thriving Physical Therapy Office in Orange County

Established over 7 years!

Physical Therapy Practice for sale. Excellent opportunity for a Physical Therapist to take over a thriving practice or as an acquisition by a larger group.
Owner is ready to scale back and semi-retire. Established over 7 years ago, this practice has been built offering quality care and superb professionalism. The office sees on average 75 patients weekly, with the ability to grow to 125-150 patients per week without sacrificing patient care.
Great relationships with referring physicians. Excellent web presence, plus 5 Star reviews on Yelp, and professionally designed website.
Almost all patients are covered by insurance, about half are Medicare.
Specialties include: rehabilitation after injury, post-operative care, osteoporosis programs, Parkinson’s disease treatment, lymphedema treatment, pelvic floor management/Incontinence management, & oncology rehabilitation.
This business is represented by Spectrum Business Advisors. Please contact a Business Broker at 1-800-Biz-Broker for more information.

Riverside County Business Sales Still Strong

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812 Businesses sold in 2017 vs 847 in 2016, however overall market is strong

Good news for Business Owners considering selling their businesses.   Although the number of total business sales in Riverside County dipped marginally to 812 versus 847 businesses sold in 2016, overall, sellers are still in the driver seat.   

Qualified business buyers outnumber quality businesses to purchase.  Our biggest issue is finding established businesses with good records.  When we get a quality listing, we can expect multiple offers.

The graph below summarizes the total number of businesses sold in Riverside County by year since 2010.  This information was taken from the BizBen Business Sales Report.

 

YearBusiness Sales
2010452
2011681
2012672
2013708
2014683
2015634
2016847
2017812

*data taken from Bizben.com

If you are thinking about selling your business, now may be the best time!  Give me a call to schedule a confidential meeting and business valuation.

New Business For Sale – Water Delivery Route

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Business Description

Profitable w/Recurring Income!

ESTABLISHED Water Delivery Route
Everybody Needs Water! Service approx 600 active accounts (95% residential, 5% businesses) in the following protected territories: Lower Desert Cities; Indio, Palm Springs; Riverside, Moreno Valley, Ontario, Upland. SO MUCH potential for growth. Currently operating on a 4 week delivery schedule, 4 days per week.

The seller is retiring and selling off this established distribution route. Easy business for the owner operator OR hire another driver and expand! This route can easily grow to be split into 2 or 3 routes. Route Established for many years!

Desert Cities Established for over 20 Years
Riverside/Moreno Valley Established for over 2 years
Upland/Ontario Established for over 5 years

Included with the sale: about 600 active accounts, a delivery truck, coolers, stands …. even 200 coolers already rented and earning $7 every four weeks!

This business is represented by Spectrum Business Advisors. We are Business Brokers, call 1-800-Biz-Broker for more information. Confidential Business Sales.

Detailed Information

Employees:
0
Furniture, Fixtures, & Equipment (FF&E):
Included in asking price
Facilities:
Included an Exclusive territory with TONS of expansion potential. Included: Coolers: (250 @ $100) $25,000 Stands: ( 100 @ $40) $4,000 Truck: $5,000 (Home Based)
Competition:
WATER! Everyone needs it!
Growth & Expansion:
Get more accounts!
Financing:
TBD
Support & Training:
Yes! Ride along available with accepted offer during your due diligence
Reason for Selling:
Retiring

 

CONTACT US TODAY!

Chiropractic Practice for Sale

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Chiropractic business For Sale!

Price: $244,999

Rated #1 Health Franchise by Entrepreneur Magazine
A VERY ATTRACTIVE BUSINESS MODEL !! WHY BUILD ONE FROM SCRATCH?
This chiropractic practice was Established in 2015
Over $350K has been invested in Build-Out & Operations
Operation is PROFITABLE if purchased and operated by a Chiropractor
Buy now for MUCH LESS than starting from scratch!
Owner selling due to health issues
Fully Staffed including Chiropractor
Recurring Monthly Fees: 490 Active patients
A+, lux Facilities
Established + Awesome Reviews : YELP

This business is represented by Spectrum Business Advisors & marketed by 1-800-Biz-Broker. Please contact us for more information and/or complete a non-disclosure agreement.  You can also visit our listing on BizBuySell

$500K Price Drop! Niche Trucking and Transport Business

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Trucking Company – Refrigerated LTL Trucking

 Riverside County, CA

Asking Price:$4,500,000  $3,999,009

Cash Flow:$1,200,000

Niche Trucking Business over $1M in Cash Flow!

Starting as a freight broker in 2002, this company has grown into a regional leader specializing in LTL (less than truckload) refrigerated trucking. Based in Southern California and currently serving Washington, Oregon, Arizona, Nevada, New Mexico, Texas, Oklahoma, and Louisiana.
>> Seller is willing to stay on as needed to offer a seamless transition.
>> Over 100 established accounts.
>> Company currently has 14 late model trucks and trailers.
Real Estate: Leased
Employees:5 F/T, 15 I/C
Furniture, Fixtures, & Equipment (FF&E):Included in asking price
Facilities:1500 sq/ft office space. $1500 /mth 1 Acre Yard to park trucks: $3200 / mth 6,000 sq/ft warehouse. $15,000 /mth
Competition:Niche service
Growth & Expansion:Expanding into new areas Adding warehousing services Consolidating office, warehouse and yard space.
Financing:TBD
Support & Training:Yes! Owner is willing to stay on long term to train and consult/work as needed.
Reason for Selling:Owner wants to simplify lifestyle. No longer wishes to manage.

Please contact me for more information!  Interested buyers must complete a non-disclosure agreement.

Secret to Selling your Business: Financial Housekeeping

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Improve your chances of selling your business for maximum profit by presenting buyers with accurate and complete financial statements. Even if you have an upscale office, first-class employees and great branding, buyers will balk if they don’t see impressive and verifiable numbers on your financial documents.

If you don’t have a CPA working for you, hire one to assemble and double-check your finances. Selling a business creates complicated tax issues, and an accountant knows how to lower taxes, which means you’ll keep more of your post-sale money.

An accountant, along with a business broker, will help you fine-tune your company’s financials. Prospective buyers will have their own accountants looking over your financial documents. If you prepare financials without professional help, you run the risk of losing or delaying a sale.

At the first meeting, you may want to discuss basic financial information and let the potential buyer observe how your business operates. Let them come to their own conclusion about the company’s financial health. If you have a cash business, like a deli, you can also write a pro-forma estimate for a potential buyer. It should be clearly marked as a “projected” total to protect your interests. This is a temporary solution –  you’ll still need to get your books in order for future negotiations and due diligence.

Your accountant should prepare at least two to three years worth of financial statements. For extra leverage with prospects, gather financial statements from the last five years. You can show buyers compiled, reviewed or audited statements.

  • Compiled statements aren’t checked for accuracy. You simply hand the accountant your income statement, balance sheet and other financial records and he or she organizes them.
  • Reviewed statements are compared to the average profits and performances for businesses in your industry.
  • Audited statements are checked for accuracy by your CPA, who may go over accounts receivable records and inventory to ensure there are no mistakes in the original numbers.  

Be honest. Buyers can see through incomplete or exaggerated information, so admit mistakes and tidy up your business financials   

 

What is Financial Recasting?

Your business broker may recommend financial recasting of your accounting statements. This process improves transparency, Compiling financials is fine as a first step, but when it becomes apparent a buyer is interested, there’s no room for error on your financial statements.

Financial recasting is a fancy way of adjusting your income statements to tell potential buyers what they want to know about your company. Here are a few changes your accountant might make when recasting a financial statement:

  • Take out interest payments made on business loans
  • Write off uncollectible accounts receivable
  • Adjust rent and owner’s salary to market rate
  • Strike debt that won’t be assumed by the new owner
  • Remove income and expenses that will cease after the sale

Indicate changes made to your original documents. This will increase the buyer’s faith in you and expedite the due diligence process. Your accountant may make changes to your income statement and balance sheet when recasting. Changes to the balance sheet indicate cash you’ll keep for yourself after the sale.

 

Ratios

Buyers want to know how a business compares to other businesses in the same industry. Return on assets and return on equity are common ratios used in most businesses; check with your industry’s trade association to find out what ratios should be used for your business.

 

What Do Buyers Look For in Financials?

Buyers are more likely to make an offer to businesses that pay their accounts receivables within 30 days and have an increase in net worth for the last few years. They’ll also check the gross margins for your products to see if margins are increasing or declining.

Most small businesses prefer to use compiled statements during the sales process. This won’t harm negotiations with the buyer if you’re sure the initial figures are correct. If not, audited statements may prevent objections during due diligence.

Get expert advice on improving your business and financials for a fast sale by hiring a business broker. http://sellyourbusinessfast.info/  Call 1-800-BIZ-BROKER or visit us online at www.1800bizbroker.com. We’ve created a searchable database of business brokers and merger and acquisition specialists who want to work with you to sell your company for the best price possible. Contact us today for more information.

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