and How a broker can help you avoid them
You are nearing retirement, and you want to enjoy a more leisurely life with less demands. Perhaps you are looking for a career change in the second half of your career. No matter what your situation, your medical practice is the greatest obstacle in your path. It’s time for you to sell.
Many doctors and practice administrators are in this situation and feel tempted to sell their practice by themselves. However, they are reluctant to hire a broker to help them. “Wouldn’t it be great to save 10% on the brokerage fees?”
You may be an expert in running your business, but not necessarily an expert in selling it. If not managed well, the complex business sale process can lead to long-term, adverse repercussions. These mistakes can be avoided by a good broker. In most cases, they can add at least 10-12% to the sale price.
This article will provide a deeper look at the potential pitfalls that you might encounter when selling a practice.
The single most important factor that determines how long a business remains on the marketplace is price. Inexperienced sellers are more likely to place a price before they have determined the value. This results in a high price. Sellers who spend the time to evaluate the market before setting an asking price are better positioned to defend the price and enjoy a smoother, faster sale. Some sellers undervalue their businesses, which can leave you with money that you could use to invest in your next stage of life. Florida Medical Practice Brokers is an experienced broker that uses a thorough valuation method to position your practice in the market.
Serious Buyers Are Not Attracted
It is crucial to pre-qualify potential buyers before a business sale can be completed. We have found that sellers often avoid qualifying potential buyers too early, fearing it might scare them away. Only 4-5% of the potential buyers who contact you will actually purchase your business. This makes pre-qualification crucial for a smooth and timely sale. Most sellers don’t know how or have the time to screen potential buyers.
Not protecting Confidentiality and Not Protecting Oneself
It is likely that you are concerned about confidentiality during the sale process. It could negatively impact your revenues and relationships with your staff if your business sale goes public. You still have to spread the word and market your business. It can be difficult to get the word out about the sale of the business without telling anyone that it is your actual company for sale. How can you tell enough without being too transparent in your ads? How can you maintain confidentiality while talking to potential buyers?
We have seen many business buyers try to bypass the barriers that were put in place to protect sellers. Even if you work with a broker, they may try! They might try to get around confidentiality agreements, or force you into sharing confidential information such as trade secrets and patient demographics. Good brokers help you to maintain confidentiality and protect your business during the entire process.
Brokers can help you present your business in the best light, and protect you from potential misrepresentations to potential buyers. You may find yourself tempted to exaggerate figures, make projections that are not accurate, or cover up issues. These types of misrepresentations can raise red flags in the eyes of potential buyers when they review the financial statements. They could even be grounds for legal action.
The Transaction & Closing
In today’s market, all-cash sales can be unrealistic. A seller’s tax position can be impacted by cash sales. Today’s buyers will need concessions, such as seller financing, deferred payment, or assistance with obtaining third party financing. Although you don’t necessarily need a broker for marketing your business or vetting potential buyers, it might be worth hiring one to help with closing. A broker will help you to navigate the complicated closing process and lessen any stress.
Documents, Transitions, Contingencies, and More
There are many other steps in the selling process that can lead to mistakes and wasted time. Are you able to draft and negotiate a letter of Intent? Can you manage the due diligence process and obtain a lease assignment? A serious buyer will need to meet with some of your key employees, how and when this is handled is critical. Are you familiar with the steps and timeframes for removing buyer contingencies? Are you able to negotiate the sale of your practice? If you’re managing the entire process, have you considered how to ensure continuity of your business during the sale?
A business sale is complex. Each detail can lead to serious and long-lasting repercussions.
Perhaps It’s Time to Call a Broker
Abraham Lincoln once said that “a man who represents himself has a fool for a client.” Although representing yourself in the sale or purchase of your practice will save you money in professional fees, this doesn’t guarantee you will get the best results. The expertise of a broker will maximize your purchase price, help you sell quickly and efficiently and protect you. It will also allow you to focus on your business while the process is being completed and provide you with peace of mind knowing that everything is taken care.
Florida Medical Practice Brokers was founded because of a gap in the healthcare industry for a brokerage that understood sellers’ goals and needs. Our brokers have direct experience in the medical industry and can help you maximize the sale of your business. We are also focused on protecting your legacy, patients, staff and legacy.
Selling your practice can be bittersweet. We also understand that it can be stressful and conflict-ridden. As you sell your business, you will feel relieved and grateful that we are there. We offer safety, privacy, and loyalty and can help you get started on a new season that you will be proud of. You can also trust the path that we create for you and your practice, which will make your transition easier.