Family, partner, stranger or just walk away…which is right for you?
When it comes right down to it, there are only a few ways to getting out of your professional practice. Only you can determine which option is best for you. Here are some points to consider.
- You could pass on your practice to family. However, a professional practice, like your primary care practice, may present a bit of a challenge. You may not be able to give your practice to a family member, unless he or she is professionally qualified to work in the business or is willing to hire a provider to do so. Therefore option one generally tends to be more feasible with small businesses like crafts stores or gift shops rather than a professional practice.
- Another option might be transitioning the practice to a partner. If you already have a partner in your practice you might simply sell your part of the partnership to your partner (as outlined in your partnership agreement). Or, you may consider bringing in a partner(s) with the intention of transitioning the practice to the partner(s) within a certain time frame.
- Of course, you can always sell the practice to an outside third party: either to another provider, provider group, local clinic or clinic chain. However, depending on the type of practice, the practice structure and overall condition of the practice this may be very doable or proof to be challenging.
- And lastly, you can simply walk away from your practice. This option is always available to you. Here you simply notify your patients and close your office. You may choose to sell any business assets or donate them, it’s up to you.
As you may have already guessed, selling a professional practice presents unique challenges different from most other businesses. Here are just a few of them:
- Typically the owner, you, provides the core services of the business.
- Patient loyalty is with you and not with the “business” per se.
- Goodwill, an intangible asset, is the main asset for most professional practices (unless the practice owns real estate and/or high ticket medical equipment).
- The selling provider is concerned with the quality and continuation of care for his/her patients.
These issues may take on greater importance depending who will buy your practice. A clinic chain or provider group probably won’t lose any sleep over any of these issues. However, if you sell to a solo provider or small partnership it will be a different story. Here are some of the questions a solo practice owner might ask:
- Is the practice solid?
- Is there enough goodwill and can that be transferred to me?
- Will the patients accept me? Will it be a good fit for me?
- Will I be able to retain the established patient base?
To counter these issues and increase the chances of success, frequently buy/sell agreements provide for seller assistance during the transition period. This simply means that the seller agrees to help the buyer, the new provider, either by working with him/her side by side or by introducing (and hence endorsing) the new provider to the established patient base. Either way, providing seller assistance as part of the sale will help make the transition go much smoother.
©2011, Johanna Hofmann, MBA, MAc, LAc. All Rights Reserved.