Do Your Homework When Selling Your Practice

Written by on November 29, 2013 in Features - No comments

Every physician and practice owner will sell their practice during their career or the practice will close.  There are several reasons for selling your practice that include:

  • 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.
  • 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.
  • 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 I can provide, is to do your homework.   If you have proper planning on the front end by drafting an operating agreement, buy/sell, stock repurchase, you may have an opportunity to exit your practice own 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.

Check List When Selling Your Practice
  • Do you have a really sharp and informative Website
  • Does your practice show well?  Do you need fresh paint, carpet cleaned, landscaping, etc.
  • Are your financials in order and can you put your hands on them.
  • Is your practice staff solid or do you need to hire a new staff member?
  • Do you have any debt?  Will your debt be paid off before closing or at closing?
  • Are there any unresolved situations; lawsuits, partner buy-in or buy-out problems?
  • Are all of your taxes, interest and penalties paid?
  • Is your practice building  leased or owned?  Do you want to lease, sell or lease with an option?
  • Do you have an attorney

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