How do I get ready to sell my practice?
Once you decide to sell your practice, you can work with your Simmons‘ advisor to develop an exit strategy that will encourage a smooth sale and potentially mean a higher selling price. Planning three to five years ahead for a sale will help you maximize practice value and minimize the emotions of walking away from the practice you‘ve spent a career building.
Here‘s a checklist to prepare your practice for sale:
Practice valuation – A valuation sets a baseline of your practice value and can illuminate areas that need attention. With advanced planning, you can make adjustments over time that will boost the practice‘s total value.
Exit strategy – If the value of your practice does not meet your expectations, you may want to consider a formal, written Exit Strategy Report. We‘ll gather information to suggest improvements and enhance the value and salability of your practice when the time is right to sell. We present our opinions and possible solutions in a written report. With each new tax return, we‘ll prepare an updated report and have conference calls to track progress. Exit strategy planning will fully prepare you to sell your practice.
Marketing plan – You want to improve your practice‘s image to attract more and better clients, ultimately improving the bottom line. It‘s the perfect time to brand your business by updating your brochure, logo, client handouts, business cards, website, and every item with your practice name. Your sharp public face also will catch the eye of interested buyers.
Estate plan – If you‘re selling your practice and retiring, you need to make sure that your practice sale meets your income needs. Changes may need to be implemented now to get maximum benefit from the large influx of cash after the sale.
Staff training and morale – A sharp support staff is a valuable business asset. Well-trained paraprofessionals who enjoy working at your practice will be a huge selling point to the buyer. We also can advise you on when and how to tell your staff that you‘re selling the practice.
Non-compete agreements with key personnel – This is an absolute must when selling a practice. When a buyer invests large sums of money in a practice, he or she wants assurance that associate veterinarians, and possibly even managers and key employees, will not open a competing practice. An attorney can draft enforceable agreements (assuming that they are legal in your state) that also are transferable to the new owner.
Environmental and zoning concerns – If you own your real estate, make sure there are no environmental red flags such as buried tanks or contaminated soil. Check for non-conforming zoning before listing your practice. Failure to do so can prove costly.
Fee increases – Timely fee adjustment is a good business practice that maintains cash flow. Clients seldom notice small, regular fee increases, and the average charge per transaction can raise your practice‘s income substantially.
Expense control – For every $1 in expense reduction, the earnings will increase by $1 and your practice value will go up by $3 to $6. Watch your inventory turns, capital expenditures, and even personal expenses paid through the business. Clean up your books to support your asking price and show there is nothing to hide. Give equal attention to reducing your accounts receivable, which can raise questions about the quality of your clientele.
Leases – If you lease your facility, confirm that your lease is transferable and that you can be released from the lease once the practice is sold. Also check leases on equipment as well as notes owed. Some notes have “due on sale clauses that require pay-off at closing.
Equipment upgrades and repairs – Complete minor repair or replacement of equipment as if you were going to remain the owner of the practice. Avoid buying expensive or non-productive equipment just before a sale because the practice won‘t increase in value by the amount spent on new equipment. Practices are priced based on the income generated from services using the present equipment.
Facility spruce up – A thorough cleaning, fresh coat of paint inside and out, and minor repairs can showcase your practice as move-in ready to a potential buyer. Curb appeal can confirm the buyer‘s decision to purchase and leave fewer imperfections to haggle over before closing.
Assemble your professional team – Your Simmons‘ advisor can work closely with your accountant and attorney. We can aid other advisors so your best interests are maintained. Good advisors will earn their fees by saving or making money for their clients as well as minimizing their clients‘ risks.