G.M. Kingsbury, DC
— Selling a chiropractic practice can be at
best difficult and at worst an emotionally gut-wrenching
experience. Reasons for selling vary and each reason
can carry an emotional toll which may cloud the judgment
and rationality of the seller.
practice being sold because of disability or death
of the practitioner particularly needs the objective
evaluation, appraisal and negotiating ability of an
intermediary or qualified broker. Many a successful
practice has been sold at bargain-basement prices
because of the inability of the disabled doctor or
estate executor to negotiate effectively due to the
emotions surrounding the reasons for sale.
many a doctor just changing careers or locale has
failed to receive fair value for his practice because
of faulty assessment of the practice’s real
value and because a driving urgency for change precluded
his ability to assess the full worth of his practice.
one reads the classified ads in our national and local
publications they will see a lack of uniformity as
to how practices are priced. Practices nationwide
are being sold for one-quarter to one and one-half
times their yearly gross collected income.
personally bought and sold practices over the last
14 years has given me a chance to play the game from
both sides. On several different occasions I have
been involved with practices of equal patient volume
and income selling for a difference of thousands of
dollars. The lack of knowledge is astounding when
it comes to doctors pricing their own practices.
as a group, chiropractors are an independent, self-motivated,
do-it-yourself breed — and that is where the
problem lies. Many DCs feel since they started their
own practice, built it and intimately know its ins
and outs, “Why shouldn’t I be the one
to sell it?”
logic can be correct when you compare the knowledge
the typical DC has about his practice to the typical
business broker who sells everything from bars to
have found some business brokers totally unqualified
and unknowledgeable about how a chiropractic practice
operates. Most simply take gross or net income figures
and decide to price according to some percentage of
those numbers. They know little or nothing about patient
management, CA function and training, insurance coverage
and assignment procedures, new patient acquisition,
legal and insurance narrative reports, patient education,
advertising and promotions, patient visit averages,
office visit averages and a host of other intimate
little details which are essential to operating a
the other side of the coin, the successful DC may
know all those aforementioned details about his/her
own practice but doesn’t understand how they
influence the value of this practice, so he or she
too prices it according to a percentage of gross or
net income figures which may in effect under or over
example here may further illustrate what I mean.
A grosses $250,000 per year. It has a high patient
visit average of 50, but only sees 15 to 20 new patients
per month, almost all the result of direct referral.
B also grosses $250,000 per year but its run on an
acute basis, averaging only 10 to 15 visits per patient.
New patient volume is high, 40 to 50 per month, because
of an intense marketing and advertising program which
draws in approximately 90 percent of all the new patients
into the practice.
first glance it may appear that both practices should
sell for the exact same amount regardless of whether
the doctor’s formula for pricing is one-half
or the full gross value.
an in-depth knowledge of the mechanics of how practices
operate, I would assess practice A to have a much
greater value. Here is why:
Practice A obviously has better educational, management,
recall and financial procedures, thus encouraging
long-term care and better compliance.
Practice B being an acute care practice with little
corrective or maintenance care obviously must rely
on heavy advertising and marketing costs to keep patient
volume, new patient numbers and income up. The overhead
and stress level of running a high, new patient dependant,
acute care practice is much greater than the practice
comparative analysis of these two practices could
evidence other significant differences. Practice A
would have a much greater “good will”
associated with it, guaranteeing future stability
for the buyer. The referral numbers in this practice
reflect some of that good will which usually stay
with the practice under new ownership.
Practice B is a marketing-driven pain-relief-only
practice, good will would be much less if advertising
and promotion were cut back or curtailed the value
of future good will under new ownership would be less.
Like this example there are numerous subtle differences
between practices that on the surface may seem to
be worth the same amount.
typical business broker is totally unaware of these
subtle distinctions. Doctors rarely take them into
account, and the same goes for sellers, buyers, accountants,
financial advisors and even practice management consultants.
Rarely do any consider the differences that distinguish
two practices in terms of their value.
what value could a qualified broker be to someone
who wants to sell or even buy a chiropractic practice?
A competent chiropractic brokerage service should
have at least one successful experienced chiropractor
on staff and be able to provide the following services:
Practice appraisal or valuation which firmly prices
chiropractic practices for chiropractors, the courts,
attorneys and accountants. Appraisals should be much
more thorough, detailed and efficient when compared
to the typical business broker, accountant, financial
advisor or practice management consultant. Not only
should all the financial data be scrutinized, but
the practice statistical profile, including patient
volume, new patient numbers, patient visit average,
case average, office visit average and collection
rations should also be studied and evaluated.
addition, the current patient mix should be analyzed.
It is extremely important to know what percentage
of total patient volume is personal injury, major
medical assignment, Medicare, cash, etc., and how
they got to the office, i.e. direct referral, phone
book, sign, attorney, etc.
Negotiate and arbitrate between sellers and buyers
the price, terms and conditions surrounding the selling
and purchase of chiropractic practice.
Consult with attorneys and accountants regarding the
sales contract preparation and all financial details.
Market and advertise the practice for sale in national
as well as local publications.
Match potential buyers with potential sellers.
Offer consulting services after the sale to assist
in orderly transition and retention of the existing
certainly behooves the seller to buyer of chiropractic
practices to have someone with extensive experience
in operating, selling and buying practices to work
with them. A competent, efficient, qualified chiropractic
brokerage service can fulfill such a need.
M. Kingsbury, DC, can be contacted at 908-419-7510
or at firstname.lastname@example.org.