Strategies for Selling Your Medical Practice
There’s been a lot more interest from hospitals and large groups in buying medical practices in and around California. More and more physicians who are planning ahead and considering the sale of their practices are conducting valuations, as they want to have an idea of the value of their practice as a way to have a benchmark for negotiating. This process helps physicians improve their bargaining power and, as a result, realize a better price on the sale.
Keep these thoughts in mind as you consider a sale of your practice:
1. Develop a list of several potential suitors.
If you’re thinking about selling your practice, consider asking your business valuation consultant to get in touch with the most likely prospects to let them know that you may be selling your practice and that you wanted them to know about it. This can include touching base with local hospital administrators. You never know, they may have plans to start a practice group or may want to provide your specific practice to someone interested in practicing in the community. In addition, your business valuation consultant should talk with each local group or specialist and let them know of your plans. One of these practices may be planning to expand and the might want to hire a new physician to take over your practice.
2. If you’re the own the practice facility, start your preparation for two sales.
If you’re the owner of your practice building or own your office space, you have some additional options here, as there are really two sales. Consider the following:
- Sell the practice and lease the space. This gives you the opportunity to become a landlord and collect rental income;
- Sell the practice and lease the space, with an option to buy. This gives you the chance to continue as a landlord or find a buyer to invest in rentable space; or
- Sell both the practice and the space. If a purchaser of the practice isn’t interested in owning the facility, you can look for a buyer.
3. Stay on as an employee physician.
You may want to negotiate a position for yourself into the practice purchase agreement. In fact, the buyer, especially a hospital, may want to have you stay on at the practice as an experienced employed physician. You now will have two negotiations to think about:
(i) the sale of the practice; and
(ii) the employment agreement.
When the hospital becomes the owner of your practice, you should try to separate the future performance of the practice from your own as an employee. Try to negotiate a compensation plan that’s based on your performance rather than that of the new owners.
These three ideas should help you and your business valuation consultant preparation for an effective sale of your practice.
To discuss selling your medical practice in the Sacramento area, please visit our websiteServices and choose from the drop down menu the information you’d like.
For more immediate help, please send an email to Andrew Rogerson or call our office at (916) 570-2674.