So you want to buy a practice?
By Tom Deters, DC

Chiropractic practices are bought and sold fairly often. Approaching such a large investment can be daunting to say the least, especially if you haven’t had much training or experience in buying a business.

One rule applies in this type of real estate transaction: Every sale is unique. If you are looking to buy a practice, this article is meant to get you thinking — and preparing.

THE GAME PLAN

Without a detailed plan and procedures, evaluating and buying a practice can be overwhelming — and risky. As decision time gets closer, the best way to find answers and substantiate your decision is through research.

The first part of this process assumes you have already determined your personal mission statement for your prac-tice in terms of scope, types of patients, workload, financial expectations, projections and a five-year vision.

The purpose of buying a practice is to provide a vehicle that gets you to your five-year vision more efficiently and profitably than you could by launching one.

The second part of the process is finding a practice in the area you like and with the scope of practice you prefer and begin the evaluation process, which will include a market and competitive set analysis of the community, a SWOT (strengths, weakness, opportunities and threats) analysis of the practice, a thorough business analysis, and finally the bidding and negotiation process.

WHAT’S IT WORTH — TO YOU?

While most purchasers tend to focus on price, remember that there are no good or bad prices — only good or bad deals.

Purchase price is determined in the context of what the property can bring you in terms of the potential return on investment.

Take the example of the 26-year old new chiropractor who is looking at buying an established practice from a doctor who is retiring, has been in the location for 20 years, and focuses on relief care via manipulation.

The new young doctor has visions of bringing in a massage therapist, building a strong sports chiropractic clientele, and doing a lot of rehab. Because trans-formation of the practice is an issue, the amount he might pay should not be as much as the amount someone would pay who could move in “as is” and continue the work of the former doctor.

The less “fixing up” you have to do, the more value the practice may have.

BUILD YOUR TEAM

The dangerous part of business is that you don’t know what you don’t know! Reliable, trustworthy and expert counsel is essential.

This is not the time to skimp. Money spent on accountants, attorneys, and consultants is typically money well spent, considering the potential downside. Just getting the right purchase agreement with detailed termination and accounting aspects can be worth every pretty penny you pay.

BE DILIGENT

Before you buy, the practice must be analyzed from top to bottom to determine what strengths, weakness, opportunities, and threats exist.

Most chiropractors focus on what they know — chiropractic. You should analyze everything you can about the chiropractic aspects of the practice — how active patient files are, what techniques the doctor uses, the equipment the doctor uses, and so forth.

The key point is that as much, if not more, attention needs to be given to the business side of the practice. The sidebar (“Checklist of items to analyze”) is a basic (and therefore incomplete) checklist of some business items for you to obtain and analyze.

You must be willing to accept that most practices will not have all the numbers and statistics simply because the doctor never had them.

While flying blind is risky, reflect your risk in the purchase offer — meaning you can’t value what you don’t know! The job is not just to look at the numbers, but rather what the numbers tell you.

THE END GAME: NEGOTIATION

Negotiation has a number of key elements, such as the time frame (most deals are cut as time deadlines force the issue), information (intelligence), and power (both real and perceived).

While many negotiation tactics exist, it all comes down to this: It’s tough to “win” a negotiation (deal) unless you are willing to walk away from the deal. Sure — buying a practice has an emotional aspect, but don’t let your emotions obscure a sound business decision.

Buying a practice should be hard, but rewarding, work. You’ll probably find that the harder you work, the “luckier” you’ll be — both financially and in terms of the greater number of patients you will be able to serve.

For further information on seminars, workshops and consulting on strategic practice development by Dr. Deters, go to his website www.tomdeters.com or you can e-mail him at info@tomdeters.com.