On Preparing Your Practice for Sale

Phases – 2008

First Things First

When you transition from your practice, there are a multitude of matters that require thoughtful, timely planning in order to experience a smooth and successful outcome. They include personal, professional and practice preparations…in that order. 

This article focuses on the critical first steps you should take prior to seeking a buyer of your practice. This applies to solo and group practices.

It will be useful for you to review previous articles that discuss personal and professional readiness in greater detail.

Early Considerations

It is helpful  to be aware that preparing your practice is a tedious and often lengthy process. It is often overlooked that the time and effort that must be applied to this endeavor is superimposed on everyone’s existing workload. For these reasons, it is necessary to evaluate your staff’s and your own responsibilities as well as the time available to fulfill them. This will help you determine whether changes are needed in order to meet the challenges that lie ahead.

These preparations to present your practice to a prospective buyer presume that you have a successful, well-functioning practice that serves everyone affected well. However, there are times when this is not the case and identifiable concerns should be addressed.

With either scenario, a practice that is presently functioning well or has been optimized,  does not equate to being ready to present to a prospective buyer. The next focus of your attention is to shift into sale readiness mode.

Perspectives: Seller and Buyer

Your perspective as a seller is different from that of a buyer, regardless of who it is. You have devoted your career to developing your practice to serve your patients, your staff, yourself and your family well. There are abundant reasons to be proud of your accomplishments as you progress through your transition. 

However, a prospective buyer’s perspective is quite different. It is essential to envision yourself as a buyer who must be able to confidently appreciate the value and benefits of acquiring your practice. For this reason, it is up to you to lead the preparations that  will clearly convey that value philosophically as well as with well-organized data that support a financial investment. This will facilitate the due diligence that a prudent buyer will exercise.

The Next Step

You should anticipate a substantial and detailed request for information about your practice from a prospective buyer. The initial request is usually limited in scope that addresses key financial reports. After review, there may be ongoing interest that is expressed along with requests for much more extensive information.

The number of tasks and time that it takes to prepare this myriad of data is often underestimated. For this reason, and the fact that you and your staff are properly focused on the care of your patients, it may take weeks or months to reply even to limited data requests. This is a common occurrence that prospective buyers, especially private equity firms, encounter. 

Therein lies the opportunity to distinguish yourself and your practice.

Rise Above the Rest

In addition to the condition and value of your practice, I believe that the most valuable and useful way to distinguish yourself is to prepare, as complete as possible, a set of data that a prudent buyer will need to undertake due diligence. It should be completely ready to present upon request after the prudent execution of a mutual non-disclosure agreement.

Beyond that readiness, you can expect requests for certain information you may not have prepared, mostly because you could not have anticipated it. So, prepare for what you can expect and thereby be more ready to adjust to the unexpected.

By taking these steps you will present yourself and your practice much more favorably beyond the basics of clinical practice.

Plan. Prepare. Prosper. _™

Updated: April 19, 2024

PS: Would you like to learn more about how to transition from your practice? I would like to help you. I provide practice transaction services that are tailored to your specific needs. Click here to request an introductory conversation.

If you would like to learn about another way that I can guide you, check    out this brief video that describes my unique online course: 

 The Practice Transition Course for Physicians. _TM     

Cook’s Inlet – 2008

Pacific Ocean, AK