There are many reasons a Doctor of Chiropractic would consider selling his or her practice. The most common reason you would think would be retirement. Oddly enough retirement is only one among many decisions doctors are making to sell their practices. Relocation, changing careers, retirement, instructing at a college, and health, are just some factors doctors choose to make a change.
If you’re like me, you may think, where do I start? Should I call Re Max or Red Carpet Real Estate Company? My first thought is they do not know the first thing about a chiropractic practice. How could they convey to the new doctor what makes a smooth transition. What is each patient worth? Do our techniques match? You have taken care of friends, families, etc for years and want someone to follow in your footsteps with the same care. Finding a doctor with a similar technique, personality, skills, and commitment are important in the stability of your transition and continued success of the practice.
So how do you value your practice? Is it a percentage of one years net, two times the last three months gross, etc. The fact is there are many different formulas. Of course, everyone wants the highest price possible for all of the dedication, blood, sweat, and tears you have put into your practice.
Chiropractic practices have a range, usually a percentage of the last year’s gross. The percentage has a direct relationship with the following items; case average, number of new patients, location, type of practice, family or acute care, advertising, number of active patients and the list goes on. All these items help determine the value of an active practice.
Accounts receivable have a range, which is a percentage, calculated on the past pattern of payment from insurances, personal injury, cash, workman’s comp, etc. Accounts receivable, like the practice, are always negotiable between the buyer and seller. Equipment has a value as well. Market value is typically the best way to price your equipment, using age, condition, and type as guidelines.
The next step to consider; Do I want the stress and financial burden to advertise, make calls and negotiate my own sale? Most doctors want to take care of patients. You can promote yourselves and teach patients about chiropractic, but usually you are too close to your staff and patients to handle the stress of the sale. You may choose to keep the transaction confidential until the close of the sale. This can be a very emotional time.
Your practice broker should have a good knowledge of a chiropractic practice. They should be unemotional and negotiate your sale to bring you top dollar for your years of service. Not all practice brokers have a real estate license. The importance here is the ability to tie the business and building together if desired. This can be attractive to some doctors that want to cash out for various reasons.
So, part of the process of selling is selecting the right company to remove the stress from you, help you maintain your practice through this period and negotiate while you continue to do what you know best-Chiropractic.
As a chiropractor of 30 years and one who has sold a practice, I understand the emotions that transpire when selling. It is critical to have a negotiator.
One last thing, after the transition period, I believe the new doctor should be slow to change systems, prices, technique, staff or even décor. The selling doctor must convey total trust and confidence to the patients of the new doctor. As the seller, your cooperation during this period will be a major factor in the continued success of your past practice. Be a positive influence to the new doctor, they will appreciate your efforts