Podiatry practice Business brokers
Top Mistakes to Avoid When Selling Your Podiatry Practice
Thinking of selling your podiatry practice? Previously, we’ve written about the process of selling and how you can maximize the amount you receive in the transaction. In this article, we’ll focus on some easy mistakes to avoid when selling your practice.
Exiting your practice can be a tricky endeavor; especially if you’re looking to get the best price within a reasonable time frame.
Above all else, information will be your ally during the process. Many of the frustrations and challenges sellers face in today’s market can be summarized by a lack of quality information about potential pitfalls and how to overcome them.
There are also several common mistakes doctors face during the selling process. To help you avoid these banana peels, here are the top mistakes to avoid when selling your practice:
Lean on Professional Help
While you may be an expert in every aspect of running your practice, you’re not an expert in how to sell it. Enlist the services of a broker or other advisor during the process to ensure you’ve covered all the bases. Take the broker, for example. Sure, they’ll cost money up front but they’re usually capable of adding 20-25% per cent to the sale price. An experienced broker can also help you navigate the legalities of the sale, including several you likely haven’t even accounted for. An accountant will always be needed to help you get your books in order during the selling process – Your financials are one of the first things a potential buyer will ask for during their due diligence.
Pre-Qualify Potential Buyers
We are not talking about making sure the buyer is really a doctor or has a good credit score here. We are talking about vetting your prospective buyer. Buyers will naturally want to perform due diligence on your business. This process isn’t a one-way street. You should perform your own pre-qualification checks on potential buyers to ensure they’re both a good fit and financially capable of buying the business. Request pre-qualification documents such as financial records and confidentiality agreements before you release any critical information about your operation. This will prevent wasted time on both sides and ensure all potential buyers are adequately vetted.
Avoid Misrepresenting Your Practice
There’s nothing wrong with wanting to present a glowing picture of your practice during the selling process. However, it’s important not to misrepresent any facts to potential buyers. Avoid the temptation to fudge numbers, be overconfident in projections or tell any lies relating to your operations. While some sellers have undoubtedly got away with it over the years, due diligence will uncover some of these lies. Any that slip through the net could become basis for legal action after the sale. When in doubt, have your broker professionally and diplomatically explain any gray areas of your practice to your buyer.
Don’t Breach Confidentiality
Be extremely careful with publicizing that your practice is for sale. During this period, it needs to be business as usual for your operation. Confidentiality during the process is key. A business broker will be skilled in marketing your business to potential buyers while also ensuring the transaction is appraised quietly. If patients and staff know your practice is on the market it can adversely affect sales and morale at a pivotal time. There is a time and place for disclosing your sale, and a good broker will identity the best time for such disclosure.
Ensure a Transition Plan is in Place
Many practices are left floored when an important staff member departs. Far too much organizational knowledge can be held within the brains of key staff, and nowhere is this more apparent than the business owner. One of your first moves when you decide to sell is to ensure all processes are noted down and explained so that anyone can pick up the threads and ensure smooth operational consistency. An experienced broker will guide you through this process.
Find Out More
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If you are selling a podiatry practice, timing is extremely important. But is there a best time of year to sell a podiatry practice? Answer: it depends. Although the calendar can sometimes prove to be irrelevant, remember that selling a business is a process and different times of the year can have effects on the phases of that process. In this explainer, the brokers of Podiatry Practice Sales, LLC we will take a look at three, high-level phases of the process: preparation, marketing, and closing - and examine how the time of the year may or may not play a role.
Preparation means something different for every podiatry practice and doctor/owner. In general, however, it includes preparing historical financials, gaining knowledge around tax matters, refining management responsibilities, formalizing loose ends that exist in every small-to-medium sized podiatry practice, and more.
Even for the most organized podiatry practice owners, these tasks often take longer than planned. While it is true that not everything related to timing is within a seller’s control, preparation is. So like planning for any major event, you’ll want to take on these tasks proactively to avoid potential delays in launching the practice sale during the ideal market windows (more on this below).
When marketing a podiatry practice for sale, it is all about getting the most amount of buyer eyeballs to perform an initial review of the opportunity. So in order to do so, one must think from the buyer’s perspective and consider when they are most likely to be motivated to pursue an acquisition.
Generally speaking, at the beginning of the year and throughout the first quarter, buyers have a newfound sense of optimism based on aspirational plans for the year ahead. A similar scene resurfaces between Labor Day and Thanksgiving as buyers are typically back from the summer holidays and their attention is fully locked into getting a deal done before the end of the year, so they can hit the new year in full stride!
Conversely, slower seasons tend to be late spring and summer, due to kids being out of school and vacations; as well as the holiday season, which is filled with personal commitments and distractions. Assuming that your business is otherwise sufficiently prepared for the market, picking a more active time to launch can give you better odds of gaining initial traction and buyer interest.
To be clear, however, there is not actually a “bad” time of year to market a business that is prepared for the process. A high-quality podiatry practice with organized documentation will raise eyebrows with buyers, no matter what the calendar says.
The best time of year to close on the podiatry practice sale is whenever all parties involved are ready to close! On one hand, electing to postpone a closing by a few days to wait for a month, quarter, or year-end for the sake of accounting convenience only leaves room for a plethora of unexpected disruptions.
On the other hand, there may be legitimate tax advantages to either closing a sale before the end of a period or delaying closing until the start of the following period. Of course, however, the advantages must be weighed against the risks that populate as a result of delaying a closing.
Ultimately, closings happen as a result of meticulous preparation and strong marketing - it is therefore far more important to look towards optimizing those aspects because, without them, a closing won’t exist.
As you can see, an owner’s ability to succeed at achieving their objectives for a sale may depend largely on timing and even the dates on the calendar can make a difference. So when looking at your exit holistically, you must work backward from the closing and “reverse-engineer” the process to an optimal go-to-market timing and what amount of time you’ll need to sufficiently prepare.
If you are considering selling or buying a podiatry practice, please contact us at your convenience to explore all of your options.