Five ways to Maximize the Value of your Professional Practice
Irv Handler, MBA, Associate - MBC Brokerage
Most professionals hope to supplement their retirement savings by selling their practices at the end of their careers. The good news is that there is a flourishing market for established professional practices and the right practice can command an excellent price. So how can you make sure that yours is the ‘right’ practice?
Don't let your billings slip
The biggest mistake professional’s make as they near retirement is to allow their billings to decline. This is understandable since everyone wants to slow down as they near retirement. But a growing practice commands a premium price while a shrinking practice will sell at a discount. If you need to slow down, hire an associate to continue to grow the practice’s billings.
Beef up your recall program
An educated purchaser will be looking to see that you have an effective recall program to remind your patients to come in for their regular check-ups.
It is a good idea to review your recall program and ensure that it is has been properly implemented. You can also have another look at your patient files to call those patients who have not had an appointment for over a year. This will increase both your current billings and the long-term value of your practice.
Good contracts make good practices
People buying any business want to know that they will be able to maintain the profitability after closing. Having long term contracts for important suppliers, employment contacts for key employees and Associate Agreements for your Associates will help reassure your purchaser that costs will not rise in an unexpected manner.
Employment contracts should outline a code of conduct for your employees and specify termination provisions.
An Associate Agreement should include both non-compete and non-solicit clauses. You may find it difficult to negotiate contracts with existing employees and Associates. This is why we recommend a long lead-time of from 2 to 5 years to get your practice ready for sale.
An experienced employment lawyer should be able to help you negotiate these types of contracts.
Location, location, location
No purchaser wants to face the risk and expense of moving the practice. That’s why you need to negotiate with your landlord to ensure that there are at least options to remain at your current location for an additional 10 to 20 years.
Use a professional broker
A broker will hep you maximize the price you get for your practice while ensuring you are protected every step of the way. There are many pitfalls throughout the sale process. A broker will ensure you have the best possible ability to realize your full practice value while completing the sale successfully and relatively stress-free.