When selling your practice, there are certain things you should and should not do in preparing for the sale of your practice. We will address several important considerations for your review. Please do not hesitate to call your Legacy Practice Transitions analyst if you have any questions or are in doubt as to how to handle a particular situation. We welcome the opportunity to assist you in every way we can, but it is up to you to keep us informed of the need as it arises.
DO: Straighten up and clean your office. The waiting room makes the first impression, so see to it that your staff makes an extra effort to clean it before leaving at night. The magazines in the waiting room should be current. If you have a lab, then see that the equipment and counters are clean and uncluttered. There is no need for making leasehold improvements such as painting and replacing carpet.
If you own the building, then be certain that the area around the building is neatly mowed and bushes trimmed and make any necessary repairs to the parking lot.
DO NOT: Do not buy new equipment or make any expensive leasehold improvements. Please do not promise the potential purchaser that you will be replacing or repairing equipment or making leasehold improvements; the purchaser will be prepared for what he or she will see in your office. We base the sale on the economic value of the transaction, not the value of the tangible assets. Too much emphasis on the equipment, etc. works against completing a successful transaction.
DO: Confidentiality is important, and it is preferable not to tell the staff about the sale until it is actually closed. We don’t want the staff to seek employment elsewhere because they may think you will just pick up and leave the practice without a replacement. It is best not to say anything until the transaction is completely finalized.
However, if the staff or one of your trusted staff members suspects something, then by all means have a meeting with them (or that one staff person) and tell them your plans (retirement, career move, etc.). Inform them that you have retained Legacy Practice Transitions to locate a purchaser for the practice. You can assure them that you are making every effort to locate another doctor for the practice and that their jobs are secure. Be
very positive when discussing the sale with the staff, letting them know that you are looking out for their future by seeing to it that the practice will continue after your retirement! Expect them to be somewhat sad and concerned about whom the purchaser will be, but you should assure them that you will do your best to see that a suitable replacement is located.
NOTE: The only change will be that a new purchaser will most likely not have a pension and profit sharing plan for the first few years of practice. Generally the staff and their salaries are secure following the sale unless the certain staff are uncooperative (which usually does not happen; they want to keep their jobs). A practice merger, however, may require fewer staff members, so you and the purchaser will have to discuss which staff members should be retained after the merger. Experienced staff is valuable and is usually retained by the purchaser if at all possible.
DO NOT: Do not tell the staff that the practice is for sale until we have located a purchaser and closed the transaction, if possible. Do not promise them a job with the purchaser, even though you can feel certain that their job is secure. Do not increase salaries or benefits just before a closing without notifying the purchaser.
THE PURCHASER CANDIDATE:
We do our best to screen prospective purchasers and prepare them for your first meeting. We do not usually meet with you and the purchaser because we do not feel that we should be there to “monitor” your meeting. We want you both to get the chance to know each other and to feel free to ask any questions about the practice and your future plans. However, we emphasize the following:
DO NOT TALK ABOUT THE BUSINESS OF SELLING YOUR PRACTICE!
Before you even meet, we have shown the purchaser a proforma for your practice. He or she will be aware of the terms of the sale and have been told not to “negotiate” with you regarding the purchase price, terms, etc.
If both parties wish to proceed with the transaction following your first meeting, and there is a need to modify the original structure of the sale, it should be presented to you after the purchaser has first discussed the changes with us. We will then present it to you with our comments. When selling your practice, there are certain things you should and should not do in
preparing for the sale of your practice. We will address several important considerations for your review. Please do not hesitate to call your Legacy Practice Transitions analyst if you have any questions or are in doubt as to how to handle a particular situation. We welcome the opportunity to assist you in every way we can, but it is up to you to keep us informed of the need as it arises.
We pride ourselves with our ability to make good matches in this business, but just as in baseball, no one can bat a thousand; however, we do try for a home run every time we are at bat for our clients. We will do our best to weed out the bad apples, but it is not always possible to identify them in advance. Remember, there is never just one purchaser… nor is there ever just one practice for sale. If you are uncomfortable with the purchaser, then end your discussions with him or her and inform us, and we will locate another candidate. We want you to be happy with your successor.
THE FIRST MEETING:
DO: Discuss your practice philosophy and methods of treatment. Disclose any special or unusual methods of treatment and your fee schedule. Talk about the staff and patients. Talk about the area and all the positive things that are happening nearby. Show them the office any special equipment, etc. You can talk about why you are selling and your post-sale plans, but limit the first meeting to these topics.
DO NOT: Do not show your tax returns or other practice financial information until we feel that the candidate is really interested in buying. The purchaser candidate will tell us about his or her interest and ask us for any pertinent information after your first meeting. We will provide the required paperwork as and when needed.
Do not discuss the terms of the sale, purchase price, lower down payment, number of years, etc.
Do not discuss non-practice personal information.
Do not allow the purchaser candidate to review your records; there is no reason to do so until following the first meeting.
NOTE: Actually, there is little reason to review your records at all, but for some reason a purchaser’s accountant and attorney will ask if the purchaser has reviewed your records, so he feels compelled to look, but he has no earthly idea what he is looking for in your records. At least he can say “yes” to those that ask.
Do not let the purchaser candidate make copies of your records or call any of your patients.
Do not let the purchaser candidate meet your staff until he or she is committed to buying the practice.
Do not talk to the purchaser’s attorney or accountant.
Do not agree to anything to which you are uncertain; check with us first.
The less said, the better. Do not discuss your problems with other practitioners in the area. Do not “bad-mouth” the competition, but don’t build them up too much either! Do not talk down the area, or the people living nearby. Always be positive and considerate.
THE NEW PRACTITIONER: If you have a new practitioner as a purchaser candidate, just be patient. This is a first time experience for him, and he will seem to be naturally suspicious of everyone. Many times he will feel as though he must impress his friends with his ability to negotiate a “good deal.” If you encounter this, then we suggest you discontinue discussions and let us know. If we can get him turned around, then great; if not, we’ll look for others.
Just remember what you were like when you were the same age and be prepared to be a little forgiving. A new practitioner will either:
(I) believe that he is smarter and is a better practitioner than you; or
(II) be scared to death to make a decision;
(III) if you are really fortunate, he will be confident, but appreciative of the opportunity.
Remember, you are probably too old to know everything, but he or she is not!
You will have many other questions. Once you are ready to go to contract, you will receive a summary that will address those questions about the sale. Be sure to read that information very carefully and follow the instructions; you will find it most helpful. Remember, we’ve been through this before, and we will get you through it too! Make sure you maintain contact with your Legacy Practice Transitions analyst during the entire transaction. Good luck.