PRIVATE SALE OR BROKER ASSISTED
When considering the sale of your medical practice, choosing between handling the process yourself or engaging the services of a broker is a major decision that can have a significant influence on the sale price, terms and conditions of sale and the duration of the whole sales process.
What a broker brings to the table
In essence a business broker should be able to expedite the confidential sale of your medical practice for a competitive market value and save you many of the headaches associated with the sales process.
Brokers will generally have access to a short list of already qualified, active buyers in your area, to get the ball rolling quickly on your sale. They can provide you with a formal market valuation of your practice, discretely market your practice for sale, liaise with potential buyers, assist with the negotiation of the price and any terms or conditions before you proceed to draw up a contract of sale. As part of the negotiation process your broker will formalise all the agreed upon conditions of sale in a Heads of Agreement document. This ensures that both parties are in full agreement before engaging lawyers to draw up a contract of sale, saving you considerable time and legal expenses.
Do it Yourself Approach
There are often occasions where a broker may not be required. You may have already found a buyer, have agreed on a fair market value for your practice and are confident of the commercial veracity of the terms of any contract you are entering into. Under these circumstances a good lawyer to draw up the contracts may be all that you need. Some examples of this would be if you are adding or removing a work colleague as a partner under already established contractual conditions or if you have been offered a fair price for your practice with benign conditions of sale in place.
Keep in mind however that having an internal buyer does not mean that the sale will go smoothly. Practice employees tend to have a lower than commercial opinion of the purchase price, arguing their “contribution” to the existing value of the practice needs to be considered. Internal transactions can be fraught with problems, of both a commercial and a political nature. This is why a broker can bring some important commercial impartiality into the transaction.
Likewise, sales to outside buyers usually come with a range of conditions which may impose obligations on you or the practice many years into the future. A good broker can help you avoid the many pitfalls that these conditions may bring, some of which may not be perceived at the time of sale.
The benefits of using a Broker
If you are about to put your practice up for sale and don’t have a potential buyer waiting in the wings, the sales process can be far more complicated and protracted.
You will need to do the following:
Conduct industry research to establish an acceptable commercial price and terms of sale.
Create a Business Profile of your surgery to forward to potential buyers
Advertise your surgery sale discretely, to avoid upsetting your existing staff and patients
Answer inquiries, screen potential buyers and shortlist the most appropriate ones
Conduct surgery inspections by potential buyers
Negotiate the price and other conditions of sale
Draw up a Heads of Agreement
Regularly follow up with interested buyers to maintain momentum
Final exchange of contracts and handover
If you are a practicing doctor you probably won’t have the time to undertake what can sometimes be a herculean & protracted exercise. It is very easy to underestimate the complexity of the process and the amount of time it can consume. There are many potential pitfalls in the sales process that could prove very costly without the assistance of an experienced medical practice broker.
Are brokers cost effective?
Brokers charge a commission for the expertise they bring to what is a complicated and time-consuming sales process.
While it is tempting to look for ways to reduce the costs involved in the sales process, it pays to keep in mind that for the other big-ticket transactions in your life, such as selling your house, you would almost always use a professional, experienced agent. This is because of their ability to; establish an accurate market value, bring buyers to the table, negotiate the best price and handle the legal complexities of the transaction. Without a doubt the sale of a medical practice is a far more complex transaction than a property sale, and in many cases may include the sale of practice premises in the process. As with the sale of property or any kind of business, it can often be false economy to try to handle the process yourself to save on commission fees.
An experienced broker will bring a level of impartial expertise, unclouded by emotions and unrealistic expectations that can often lead to costly decisions.
What is a “good sale”?
A good sale will not only give you the best market sales price but also acceptable terms and conditions, unencumbered by onerous buyer requirements that negatively affect your practice into the future. It is one where you have achieved a good cultural fit so your doctors and staff can be happy working with the new owners going forward. Ideally the sale should be concluded with such minimal disruption to surgery life that the staff are unaware of the sale until it has been concluded.
Your best chance of achieving this outcome is by getting appropriate professional advice and assistance from a specialised medical practice broker.
What kind of broker should you engage?
It should go without saying that the ideal broker should be able to demonstrate an extensive experience in medical practice sales. The more sales that your broker has conducted the more of the pitfalls they would have already encountered and the more certain you can be of a suitable outcome.
Babich Medicos – Business Brokers
As a specialised Medical Practice Business Broker for the past 38 years, Chris Babich has successfully transacted a large number of medical practice sales in a wide variety of locations, sizes and business structures.
As an often recognised, court appointed, Single Expert medical practice valuer, Chris can provide Family Law valuations as well as independent formal practice valuations for a variety of purposes, such as private acquisitions or sales, legal and dispute resolution needs. He has the expertise to advise you on the best partnership, associateship, shareholder agreements and can also negotiate and handle all the twists and turns of practice sales.
Whatever your reasons for selling, you can trust us to handle all aspects of the sales process on your behalf and achieve the best possible outcome in the current market.