6 Steps to Successfully Selling Your California Medical Practice
When you’re getting ready for selling your California medical practice, there are several steps you need to take, and things you need to be prepared for. By taking these steps, you will make sure you find the right buyer at the right time, and you’ll make the process overall much easier.
Here are the six fundamental steps you need to take to successfully sell your medical practice based in California.
Gather Your Paperwork
First things first, there is a lot of paperwork you will need to get ready in order to sell your medical practice. You’ll not only need all of your tax returns and financials from at least the previous three years, but you will also need things like your privacy policy and information on your current EMR systems, compliance with Federal and state standards, and more.
These things, especially your profit and loss statements, the assets your practice owns, and even your lease agreement and how it works will inform the next step you must take, which is to get a business valuation
Get a Business Valuation
While you may have a general idea of what your practice is worth, chances are you have either overestimated its value or underestimated it. This is why it is important at this stage to get an accurate business valuation that reflects what your practice is worth.
This includes things like whether your practice is growing, the competition in your geographic area and your area of specialization, and whether there are other similar practices for sale in this area.
The purpose of this valuation is not only to let you know what your practice is worth but also to provide information to a lender should your potential buyer need to finance the purchase of your medical practice. A lender will use the information to determine the amount your buyer can borrow.
This can also help you with your decisions about how to handle the sale. As the business owner, you can carry some of the financing, and may even be required to do so to make the deal work. You also may want need to work with the new owner during a transition period, and this valuation can help you determine your strategy for that timeframe.
Hire Your Business Broker
While you may be an expert in your medical specialty, you are probably not an expert at selling a business. A business broker will know your local laws, how to structure your sale, and most importantly how to find a qualified buyer, vet them, and manage the overall sales transaction.
Here at Rogerson business services, we have years of experience successfully selling medical practices in California, and we can help you every step of the way, from the business valuation all the way to the escrow process required in California and the closing day.
These are all things you should be looking for in a business broker. You want someone you can trust with what is sure to be one of the most important financial transactions of your lifetime. A business broker not only brings expertise, but they also handle many details in the selling process so that you can continue to operate your practice profitably and without distraction during that time.
Prepare for Marketing Your California Medical Practice
When it comes to marketing your California medical practice, it is a lot different than listing your house for sale everywhere. For many reasons, you don’t want your competition to know that your business is for sale, how much you are selling it for, and other details. So you need to list it on private lists.
You’ll also never want to share details with a potential buyer until they have signed an NDA or a confidentiality agreement. Besides keeping things under wraps, you’ll also want to have a targeting strategy that your business broker can help you with so you are only reaching qualified buyers.
This process will also include data about your business, good photos of your location, office space, and more.
Find a Qualified Buyer
This is probably the trickiest part of selling a medical practice in California, and one of the primary reasons for having a certified business broker on your side is so important. There are several unique things about selling any business in California, but especially a medical practice.
First, just because a physician is licensed to practice medicine in another state, especially when it comes to specialization, that does not mean they will be qualified in California. They‘ll have to be certified with the Medical Board of California, and while some state certifications do transfer, this process may take time.
This might be fine as long as you, the seller are comfortable with that process, as you may want to spend time working in the practice with the buyer during and after the sale to ease the transition process for both staff and patients.
A buyer must also either be financially able to afford your practice or to obtain financing if need be. This is an important detail and one that a business broker will help you understand and navigate.
Negotiate the Sale of Your California Medical Practice
Unfortunately, selling a medical practice is not as simple as signing over the papers to a new owner. Your practice has assets and other items that go with it, and the way you structure the sale will have tax implications for both you and your buyer. Ideally, the seller doesn’t want to pay any extra taxes, and neither does the buyer.
Most sales consist of a compromise somewhere in the middle, reducing each party’s tax liability pretty equally. This is another place where you and your buyer need to have the right expectations, and a business broker can help you both manage those and set yourself up for success.
Even large deals have been broken over the smallest of dollar amounts. The horror stories abound among business brokers, so being prepared for negotiations and establishing early what “deal breakers” would look like for you is important to successfully selling your California medical practice in a timely manner.
Closing Time
Follow the six tips above, and before you know it you will be at closing time. In California, this involves a mandatory escrow process that can seem intimidating and a little complex at first. It is important that you and your buyer understand this part of the process is simply for your protection.
Your Certified Business Broker will walk you through this process, and make sure everything is in order so that the sale of your medical practice goes off without a hitch. Ready to sell your California-based medical practice? Contact us here at Rogerson Business Services. We’re ready to put our experience to work for you.
