10 secrets to selling your practice
It doesn’t have to be a nightmare!
by Ray Goddard, DC

Selling a practice can seem a lot like a bad dream. It can leave you feeling discouraged, disappointed, frustrated, and totally stressed. And because of that, many DCs settle for a lot less than what their practice is actually worth.

Several years ago, I sold my practice and moved my family to Arizona to retire — or so I thought. It didn't take long before the wheels began coming off the deal and I had to move back to Virginia and reclaim my practice. I consider myself lucky because I could have lost everything.

I spent the next few years building the practice up and getting it ready to sell again, but this time I wasn’t going to make the same mistakes. Instead, I made different ones, but finally discovered the “secrets” to selling a practice that no one seems to want to share, especially sale brokers. The bottom line — this time I sold my practice for full value.

Here are the secrets I’ll share with you:

1. Hire an appraiser who is also a DC. Hiring someone who understands the profession, and is also a member of a bona fide appraisers association, will increase your chances of a better appraisal.

The appraisal, what your practice is worth, is perhaps the single most important factor in the sale. A good appraisal will take into account other “non-statistical” factors. Unless your appraiser really knows the chiropractic profession, he or she might miss some important pieces that could increase the practice’s value.

2. Hire an appraiser who will come to your office. Some external factors may get overlooked unless the appraiser comes to your location. Is there a new housing development going in nearby your office, or is the building you’re in undergoing renovation, improving the appearance of your office? How will those factors get into an appraisal unless someone comes “on site?”

3. Increase the value before the appraisal. Similar to how a new coat of paint or better landscaping brings in thousands of dollars more in the sale of your house, you can do little things to increase the value of your practice before the appraisal. For example: Consider a new coat of paint, new waiting-room furniture, and spruced up exam rooms.

4. Get analyzed. There are bound to be some things you could do to improve your efficiency and lower your costs. Get an efficiency analysis focused on lowering your expenses and implement its suggestions. Likewise, a professional analysis of your current expenses could result in a significant decrease in overhead and a corresponding increase in profits and the practice value as well.

5. Lower your accounts receivable. If your accounts receivable are higher than normal in relation to your gross income, it may scare some buyers away. More than likely, a buyer will not pay you 100 percent of your accounts receivable, since they also know that at least some of it will never materialize. You have to determine if your receivables should be part of the sale price or if you should keep them to give you continued income after the sale. But remember: The higher your percentage-of-collection statistic, the more valuable the practice.

6. Increase the ‘good will’ factor. What is “good will,” and how much of it can you get? It might surprise you to know that good will — basically, your patient database — can often comprise the majority of the price of a chiropractic practice. The more active patients you have, the higher the good-will factor. Take steps to recall patients and move them from inactive to active status.

7. Get legal and financial advice. Ask about the best way to structure the sale to minimize your tax burden and maximize your profits. You may think you want to be paid in full and in cash, but what if that is not be the best thing for you tax-wise?

What if holding back some money and getting paid monthly by the buyer gives you a better chance to sell the practice, while at the same time, provide continuing income for the upcoming months after the sale? You never know until you ask.

8. Keep everyone on board. Offering bonuses based on the sale price at closing, for example, may be one way to keep your staff fully on board — and make the transition to a new doctor painless for your patients.

Before you list your practice for sale, figure out the most thoughtful way to tell everyone. In the same light, find a way to keep your patients from deserting even though they know you’re not going to be around much longer. For example: Share your decision to retire, but assure them that you will be passing your practice to the hands of a practitioner who has the same philosophies as you do. You simply cannot afford to have your statistics going down during the sale process.

9. Question whether you need a broker. The Internet has made it possible to advertise your practice for sale to virtually anyone who might be interested, at very little cost. Do you really want to pay someone (a “broker”) 10 percent of the price you get for your practice just to list it for sale for you?

The real estate industry is realizing what most sellers need is professional help maximizing the property’s value before it goes on the market, and then more help with the technicalities of the closing. But most sellers are completely capable of listing and showing their home to prospective buyers — saving them thousands of dollars in real estate commissions. The same could be said for a practice.

10. Ask for help. Find someone who will help you, has experienced selling his or her practice, and can offer guidance to you. A lot is involved in selling your practice properly and for the best price. An experienced seller can help you, while you still run the everyday operations.

Ray Goddard, DC, recently sold his practice in Virginia. He can now be reached at 800-969-0748 or www.drgoddard.com.