It may feel like the walls are closing in, but you probably have more options than you think.
As a practice owner, it can be hard to know when to sell your practice.
The reality is that there may never actually be a perfect time to sell, and waiting for that optimal point may just be holding you back from the next phase of your life.
Having been involved with many practice sales, we have developed a process to maximise your outcome as a seller and ensure a smooth transition for your practice, staff and patients.
This process includes the following steps:
- Plan early and understand the process of a sale
- Understand what you want and the outcome you are seeking
- Know the value of your practice
- Identify your potential and preferred buyers
- Approach the buyers or appoint a marketing agent
- Negotiate the sale
- Sell and settle
- Post sale
In a previous article we discussed taking on a business partner as a way of lightening the load. Here we look at planning an exit from ownership.
Your practice
Planning for a sale varies for different types of practices.
An owner of a small general practice or sole specialist practice may find the process of selling or even passing on their practice to another practitioner difficult.
According to the RACGP’s Health of the Nation report released in late 2023, 29% of GPs plan to retire within the next five years. This and the fact that there are a decreasing number of graduates opting for a career in general practice might mean it is sometimes more challenging to find a buyer for a practice. Therefore, planning for succession may take considerably more time than you first expected.
If you are an owner or part owner of a larger general practice, dental practice or specialist group practice, your ownership interest may be easier to pass on. Dental practices and larger general practices are highly sought after by both practitioners and investors. Specialist group practices, unless being sold as a whole, tend to see a sale made to an incoming practitioner in the same field.
Consider who your buyer might be
When talking to clients about selling their practice, one of the first questions we ask is “Who do you think your practice would appeal to?” A common first answer is “Anyone that wants to buy it!” However, considering who you’d like to sell your practice to can help with shaping the transaction and ensuring your legacy with the practice.
Here’s an example.
We worked with Dr Jim, the owner of a large general practice with over 15 doctors working from the premises. He had assumed the practice was too big for a doctor to purchase and therefore had resigned himself to the idea of selling to a larger corporate player in the market. Numerous corporate medical centre operators approached him but he was never comfortable with their ownership models or the terms and conditions in their sale agreements.
On the flip side, there were three younger doctors in his practice interested in ownership but uncertain of the large financial commitment and the unknown nature of operating a practice from a business perspective.
We proposed a model of a full sale and buyback to Dr Jim that would allow him to offer staged equity to the three younger doctors in the practice.
This model gave the younger doctors time to learn the ropes of operating a practice and pool the financial risk. It also allowed Dr Jim to sell to three younger doctors, with the comfort of knowing his practice and patients would be in good hands.
We chose this approach because it delivered a good financial outcome for the practice owner and, importantly for them, a level of comfort that the sale of the practice was to the buyer they saw as the best fit for their patients and staff.
While this may not be the process for everyone, this example highlights that there are many options available to owners when considering a sale.
Stepping back from practice ownership is a process that needs to be managed effectively and planned well.
We will be back with more articles about succession planning for your practice, providing insights into how to avoid the pitfalls and maximise the opportunities.
Paul Copeland is a director of business advisory at William Buck and national lead for the firm’s health services group.
