Do Your Homework When Selling your Practice

Written by on June 30, 2017 in Features - No comments

Every physician and practice owner will sell their practice during their career or the practice will close. That’s just a fact.

Reasons for selling your practice:

• Retirement
• Partner Buy-in or Buy-out
• Choosing to sell your practice to a hospital system and becoming an employed physician
• Merging your practice with a larger practice
• Death or disability
• Divorce or identifying greener pastors
• Family relocation issues

What are some considerations that you should take into account?

• Patient well being – Will the purchasing physician continue to see my patients as I did. Will their quality of care be to the standard they are accustomed to when visiting the practice.
• Employees – What will happen to your staff?  Most employers are close to their employees and want to be sure that their staff will be taken care of in the future by the purchasing physician.
• What is your practice worth?  If your operating agreement indicates the stock is worth $1, it may make negotiating the sale of that stock more challenging.
• How will you be paid?  This sounds like a simple question, but can be complex in practice.  Everyone wants to make sure that the value of their company is maximized and you get as much cash up front, without hamstringing the future capital of the practice.
• Cost of Tail policies if you carry any claims made insurance policies.  Medical Professional Liability (medical malpractice) are commonly written on this type of insurance policy form.

The best tip is to do your homework.

If you have proper planning on the front end by drafting an operating agreement, buy/sell, stock repurchase, you will have an opportunity to exit your practice on excellent terms.  The patient base and the medical community you have contributed to will be able to survive and thrive into the future, thanks to you doing the proper amount of homework during the sale of your practice.

By Thomas Hibbard
Creative Director
Med Monthly

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