How to sell your private practice

8 Dec 2021

Selling your business can be an exciting and rewarding experience, but it can also be a stressful one. Many business owners are unsure where to begin and are anxious about the process. There is a lot to consider before you even start thinking about how to find a buyer. You’ll need to know how much your practice is worth, how to let people know you are selling without alerting your staff, how to present it to prospective buyers, how to protect yourself during the process, and how to negotiate a fair deal. This article will provide you an overview of each of these areas.

Putting a value on your company

It’s important to know how much your company is worth ahead of time and to set a realistic target. The most common reason businesses don’t sell is because their owners have unrealistic price expectations, which are typically reinforced by accountants or non-specialist brokers who don’t understand the industry. If you’re financially literate, you could conduct market research, consult with colleagues who have gone through similar situations, and consult with your accountant or financial advisor for advice on value. However, for the most people, we recommend speaking with a specialist broker who is familiar with your market and obtaining a formal valuation.

Marketing your business

The first major challenge is informing people that your company is for sale without notifying employees. This can be difficult. You want to reach out to as many potential buyers as possible and disclose just enough information to encourage them to contact you, but not so much that your team and important suppliers find out too soon. We suggest creating a well-balanced teaser document that includes high-level financials, business highlights, and the broad location in which you operate but does not reveal your business identity. This can be used to generate early interest in a confidential manner, after which you can follow up with a more complete sales pack once confidentiality agreements are in place. Be  sure to properly vet interested parties, and be cautious about who you share information with. There are a lot of people out there who are just looking for market data.

Producing a sales pack that tells the right story and appeals to buyers is the next key challenge. Most business owners focus on the wrong things and add unnecessary operational detail. This makes it difficult for potential purchasers to evaluate the business and may deter them. It’s a real skill to produce a clear and informative sales pack. This is where a broker can really add value.

Finding buyers

Finding buyers is often seen as the most difficult aspect of selling a company.  There are plenty of buyers out there but finding the right one for your company might be difficult.

If you’re a small practice wishing to sell direct, start by looking at your local competitors or to staff within your own company. They’ll already be familiar with your company, so starting a conversation shouldn’t be difficult. The disadvantage of this strategy is that your employees and competition will know you’re looking to sell early on, which may be detrimental to business. This is certainly a reasonable approach for smaller businesses that are unlikely to appeal to regional or national purchasers, but medium and large businesses should avoid it.

You might want to consider posting an advert on one of the many websites that advertise businesses for sale. This normally ranges from £300 to £600 per listing per month. It will get your company in front of a wide audience, but the quality of the leads will most likely be poor. 

A good DIY option for any size business is to advertise in your trade journal. This won’t cost much and is more targeted. However, the audience will primarily consist of clinicians and a few practise owners so you may miss out on larger trade or institutional buyers.

Using a broker is by far the most effective way to find a buyer. It will help you save a lot of time and frustration. Large generalist brokers will have a sizeable database at their disposal, but specialist brokers are usually a better option because they have close relationships within active buyers in the sector.

Protecting yourself

Make sure you have a confidentiality agreement or non-disclosure agreement (NDA) in place before disclosing confidential information about your company. This is a simple contract between two parties that states they will not share or use your information for anything other than evaluating the business sale opportunity. You shouldn’t have to pay a solicitor to draft this as there are plenty of good templates online. If you hire a broker, they will require all potential purchasers to sign an NDA before sharing complete details with them.

Negotiating a fair deal

Running a proper sales process and requesting offers is the best way to assess the demand and get a fair price. If you’ve had plenty of interest and aren’t in a hurry to sell, you should be in a position to weigh your options and choose the best offer. Remember that the best buyer isn’t necessarily the highest bidder. You will likely want to consider factors like whether the payment is entirely up front, what conditions are applied to the sale, how the sale will be structured, what warranties you are giving a buyer, if there is a handover period, and how you will be compensated for any work done post sale. These are just a few of the things you’ll need to think about.

Unless you are a seasoned dealmaker, you will benefit from the assistance of a professional. If you have a skilled commercial solicitor or financial advisor, they will be able to assist you, but fees can add up rapidly. Many smaller, independent brokers can help you navigate the negotiation process and help you achieve a fair agreement. However, you should check with your broker to see whether they can help you at this point, as not all brokers will.

Final thoughts

Selling a clinic is exciting and rewarding, but it isn’t easy. If you want to do it yourself, make sure you do your homework, establish a plan, and stick to it. Surround yourself with the right people, seek counsel where you can, and clear your calendar so you can properly manage the process. Don’t get discouraged; selling a business might take anywhere from a few months to over a year.

Using a specialised broker is recommended. In the long run, it will save you a lot of time, money, and frustration. 

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