Thinking about selling your practice yourself? If you've ever sold your own home, you know it can be rewarding – and stressful! Let's discuss the issues you may encounter.
Posted in Planning on Thursday, June 2, 2022
Selling your own clinic can be professionally and personally rewarding. You skip commission fees, maintain control through the sales process, and oversee the transition from start to finish.
However, a “for sale by owner” model requires considerable time, effort, and commitment from the seller. If you’re planning to sell your clinic, it pays to know exactly what you’ll be up against.
Problems and Solutions
I’ve collected a list of the most common problems sellers face in this type of sale. Don’t worry — I’ll tell you the solutions, too!
Problem: Time and Effort
Selling a practice is work, and a lot of it. The time demands of the sales process are roughly equivalent to a second job. Practice Sales don’t just typically happen. Generally, there is a significant expense in time, marketing, networking, and energy in preparing and managing a sale process.
Many sellers aren’t prepared for this level of sustained effort. They fall behind, miss deadlines, and before you know it the sale falls through.
Solution: Be Honest with Yourself
Do you have the energy to take on selling your clinic? If you do, full steam ahead. If you don’t, it’s much better to be honest up front. Clinics that spend an extended time on the market tend to decrease in value and repel buyers.
Problem: The Devil in the Details
The buyer will need a close look at your clinic’s financial statements, equipment records, marketing systems, and treatment model. They aren’t the only ones inspecting your information — their bank or investor, their broker, their lawyer, and whoever else is involved will come to you with questions. Any inconsistencies will destroy the buyer’s trust and derail the transaction.
Solution: Check It Twice
Sellers need to know their practice inside and out, provide rock-solid documentation, and be ready to field any questions. Everything requires documentation. Buyers and lenders will generally assume the worst and not the best. Be ready to support any information that you provide.
The hard part is that you don’t know what you don’t know. If you haven’t been through the sales process before, you may not anticipate what information buyers or banks will require during due diligence. To give yourself the best chances of success, arrive over-prepared and ready for anything.
Problem: Reaching Buyers
Getting a buyer’s attention takes a lot more than posting an ad with your state association or the chiropractic school sites. Buyers are busy with many different forces competing for their attention, and the marketplace of practices for sale can be crowded. Getting enough exposure to sell your clinic can be a real challenge to initially prepare and to manage through the sales cycle.
Solution: Smart Marketing
To get that exposure, you’ll need effective marketing. Write an ad with compelling copy, find the best platforms to advertise on, and keep your listing current. Every clinic should have a professional, search-optimized web page dedicated to the sale. Sellers may also need to advertise through social media or pay-per-click campaigns.
Problem: Standing Out
Even if you do attract buyer interest, you must give them good reasons to stay and engage. Because buyers have options, they’ll be quick to move on to greener pastures at the first sign of trouble. When a buyer asks for details on your clinic, you need to be ready.
Solution: Create a Winning Package
Your financial statements must be clean as a whistle, with very easy to understand expenses and profit, and your tax strategy carefully accounted for. Equipment must be cataloged. Your price must be adjusted based on these factors as well as size, location, and treatment model.
All this information must be presented in a detailed package. If you want to stand a chance against broker-managed listings, your information needs to be just as comprehensive and professional.
Problem: Finalizing the Sale
You found a buyer and they’re interested, but you’re still not off the hook. The final stages of the sale are important and complex. Like the other steps, any delays or miscommunications may cause the buyer to lose faith and look elsewhere. As you can imagine with any large purchase- buyers are more likely to talk themselves out of a good deal than into one.
Solution: Get it in Writing
Financing must be squared away with the lender and negotiations must be finalized. Just because the buyer and seller have agreed doesn’t always mean the lender and their attorneys will be on board. You’ll need an attorney to draft a letter of intent as well as a sales agreement. When the attorney is managing all the sale details you can expect to spend at least $10,000, and in some cases much more, in legal fees. Plan ahead for these expenses.
For Sale By Owner vs. Professional Support
Throughout these steps, you must maintain your clinic’s performance to keep value from falling. Any declines in patient visits, clinic revenue, or changes in operations will provide a cause for concern with buyers and lenders and can cause a decline in clinic value.
For sellers with the energy to take on the sales process, selling your own clinic offers a unique opportunity to see the sale through from start to finish. If you don’t have the bandwidth to handle all the hassle, it’s best to find professional support.
There’s also a middle ground: Some brokerages offer à la carte support for sellers. You can get assistance where you need it and handle the rest yourself, optimizing how you invest time and money into your sale. And most importantly, you’ll be able to keep your focus where it needs to be: Preserving your practice numbers (and value)!
Don't miss the previous article in our Buying and Selling Series: Should You Own a Practice?
About Crystal Misenheimer
Crystal Misenheimer received her BBA from Baylor University in International Management Information Systems. She worked in database management in the non-profit sector prior to taking over the management and marketing aspects of three of Kevin's chiropractic clinics. As the Lead Broker for Progressive Practice Sales, Crystal has helped hundreds of chiropractors to successfully transition into the next stage of their careers. With an in-depth understanding of the intricacies of practice valuations, the constantly changing challenges of the current marketplace and the many complexities of practice sales, Crystal is the leading expert in the chiropractic practice sales space. You can find her regularly featured in industry podcasts, blogs and periodicals. She lives in Chattanooga, TN, and enjoys spending her free time hiking, practicing yoga, and spending time with her husband Kevin and their four children.