Practice Buyer and Seller Perspectives

The John Moulton Barn & Teton Range – 2010

Grand Teton National Park, WY

The Starting Point

The preparation of your practice for a sale begins with optimizing its current functions and performance. The next objective is to optimize its profitability. This is followed by the preparations that are needed to introduce and accommodate a prospective buyer.

Your Frame of Reference

If you are thinking of transitioning and selling your practice, you probably consider your practice as the product of your hard work over the course of your career…and rightfully so. It has provided for you, your family, staff and the care of your patients.

It is likely that you have a sense of pride for what you have accomplished and want it to to endure in the hands of a capable, younger plastic surgeon.

With these considerations in mind, you may think that your practice is functioning well. There may be some some tweaks needed, but for the most part, you are satisfied with its performance. 

Nevertheless, this is an opportune time to review the overall performance of your practice. Explore ways to increase it profitability and thus its value. This will reflect favorably on you and your practice.

The Buyer’s Viewpoint

As you begin to prepare your practice, consider that it is important to broaden your perspective beyond your own and consider that of a prudent, prospective buyer. 

A buyer will have different perspectives from yours, beginning with the responsibility of  making a significant financial investment and other important commitments. For these reasons, you can expect that he and his advisors will undertake a diligent evaluation of you and your practice. 

What to Do?

It is important to demonstrate that you have undertaken preparations to accommodate a new associate or buyer. As owner, you can address what you think is needed, as well as what you can reasonably anticipate from a buyer’s perspective.

This approach provides additional benefits to you beyond enhancing the current functions and profitability of your practice. It also provides the opportunity to demonstrate that the groundwork you have created is designed to accommodate an associate or buyer. This also reflects a continuum of improvements that have been implemented thoughtfully throughout your career. This  is indicative that your practice is positioned to evolve in a manner that promotes growth.

To a prudent buyer, this should add value.

Here are specific steps you should consider taking.

Preparing for a New Physician

It is important to prepare and execute a plan that addresses different aspects of achieving readiness. Some parts of it will be completed prior to the arrival of a new physician, some after. These preparations are embodied in The New Physician Preparation Plan. Some of these are:

• Completion of a set of data for a prospective associate or private equity firm to undertake due diligence.
• Obtain a third-party professional valuation.
• Your description of criteria to evaluate an associate, private equity or family office firm.
• Succession scenario: preparation of a draft employee agreement that may include the path to partnership and purchase of the practice (early legal advise is essential).
• Create a timeline for recruitment, discussions and executing an agreement with either type of acquisition.

These are additional examples of practical items to consider:

• Ensure adequate physical space.
• Consider the relationship of space and scheduling, especially if you have a surgical facility. 
• Evaluate staff needs.
• Involve your staff in preparations; seek their advice.
• Designate key administrative and clinical staff to be a resource for the new plastic surgeon.
• Prepare a schedule for staff meetings that includes your associate.
• Consider a schedule for physician meetings.
• Prepare a plan to support and promote your associate. Introduce him to other physicians, health care facilities and the community. 
• Prepare for a discussion of your mutual expectations.

Your Perspective

The preparation of your medical practice for a sale begins with you. It is important to view this process from your perspective as well as that of a prospective buyer. 

Your role will be that of leader and manager of the transition. As the leader you will need to develop a vision that you can communicate clearly to your staff who will form the core of your transition team. It will be essential to designate a key staff member to manage the details of tasks and their execution. Your management role complements that of leader and consists primarily of ensuring that tasks are performed effectively in a timely manner.

Throughout this process, keep your staff informed and consider that they also experiencing a transition. 

Plan. Prepare. Prosper. _TM

Updated: Friday, September 6, 2024

PS: Would you like to learn more about how to transition from your practice? I would like to assist 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    

The J. P. Cunningham Cabin – 2010

Grand Teton National Park, WY