How to Sell Your Medical Practice

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There are many reasons why people look to sell their Medical Practice. These can include retirement or health issues or maybe even when the owners are approached by a keen purchaser and/or interested parties. Since Covid many doctors just want to focus on practicing medicine and being a doctor rather than overseeing the administration and management of their clinics /practices. Principals might wish to relieve themselves of practice ownership and management.  

Whatever the reason for wishing to sell there are several important factors and considerations to be aware of, when planning and preparing a Medical Practice for sale.  

Determining the Practice Worth and Identifying its assets  

The first place to start is having the value of the Practice appraised through analysis of the practice’s financials. Additionally, we may wish to determine what is desirable for buyers, so you can take steps to act before going to market, with a view to increasing the sale price. 

Other aspects of your Medical Clinic that buyers might consider are whether your financials are in good condition and well prepared and whether your policies and employee and service agreements are in place and up to date. Purchasers will also assess the financial growth, plateau, or decline curve of the financials. Obviously financial growth will be attractive to any potential purchasers. A potential buyer may want to assess whether this would be a walk in or “turnkey” purchase, or whether they have much to fix to get everything up to scratch. These factors will all contribute to the sale price. We also need to make a list or inventory of all medical equipment, furniture, and stock.  

Palladium Business Broking will help with getting appraisals of the practice and accountants and valuers can provide more detail in terms of valuations.   

You may also wish to speak with your accountant and/or a broker to get a sense of what the market is looking for in practice and discuss other intangible assets the practice may offer.  

With this information you may wish to take some steps in place to maximize your Medical sale price. 

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Seek Expert Advice  

Consider getting help from professionals who specialise in selling Medical Practices. At Palladium Business Broking we have experience in selling healthcare practices and have a network of other professionals including solicitors and accountants who are experienced in selling medical clinics that we can introduce to vendors   

Preparations for Sale 

We should be aware of all the details of the lease of the premises. Lease details, rentals, landlord and agents’ details, further terms, and options assuming it’s leased are all required. If not, then the selling Medical Clinics principal doctor needs to consider future rental costs to the potential purchaser. We need to be aware of all details of all subcontractors’ doctors, employees, staff, and any contractual obligations applicable here.   

We need to start reviewing financial information, with the support of your accountant and appraisals done by Business Broker  

There are documents we will need to collect for any appraisal by brokers or valuations done by qualified valuers or accountants, and we need these ready for inspection by potential qualified buyers who have signed confidentiality contracts.  

  • Profit and Loss statements (preferably for the past 3 years); 
  • Tax returns for the past 3 years. 
  • List of Doctors and their Agreements and payment agreements  
  • Billing and any Fee schedule. Is it bulk billed or private or both and include percentages. 
  • Lists of full-time employees & their agreements including administration staff and nurses  
  • inventory of major medical equipment and furniture, software, and hardware (including any hire purchase or leasing agreements) 
  • Leases on the premises (whether leasing to another entity or to external party) 
  • Photography of the practice and its rooms  
  • A floor plan of the premises which identifies consulting rooms, and any pathology areas and associated waiting areas.  

All the above are valuable for appraisals, and valuations and will provide information to be checked by potential purchasers for due diligence and financiers’ perusal.  

Its paramount to present the Medical Clinic well in terms of its strengths and its potential for growth.  

Brokers can help practice owners to prepare and Information document that’s highlights and identifies the practices history location performances and the patient /clients’ general information and billing patterns. 

 Setting a fair and reasonable price:  

Specialized Business brokers such as Palladium Business Brokers, after appraising the Medical Practice business, can help determine a fair and competitive price for the sale of a medical practice. A reasonable appraisal attracts serious buyers and speeds up the selling process usually. Overpricing the Medical Clinic may delay sales and can result in purchasers buying elsewhere. Practice owners may also request an accountant or certified valuer to provide a more detailed valuation. 

  

Sale types  

There are usually two main types of sales for medical practices: 

1.    An all-out sale where all the owners/owner is bought out by the purchaser  

2.    Or there can be a sale of a part of or a share of the business to an existing partner or doctor or a new doctor coming into the practice 

It is good to have a clear idea of the process and documents that may be required, as these differ depending on the sale type. 

Documents that legal representatives can prepare can include heads of agreements, sale contracts, employment or contractor agreements, assignment of lease documents and disclosure statements. 

Market Smartly and Confidentially:  

Market your Medical Practice discreetly to avoid causing any disruption to your patients or staff. Specialised Business Brokers like Palladium Business Brokers are familiar with marketing specific platforms aimed at potential buyers. Using our professional buyer network and specialised platforms helps to reach potential buyers while keeping sensitive information private which all helps to optimize the result. 

Negotiate with Transparency:  

We need to be open and honest during negotiations. Allow potential buyers to verify your Medical Clinics financial and operational aspects during due diligence and to build trust. Obviously, all buyers will be bound by strict confidentiality clauses before any detailed information about the practice for sale is revealed.

Get Expert Legal and Accounting Financial Advice 

 Advice from a professional should be sought as early as possible in the process of planning and selling your practice This team should include an accountant that understands medical clinics: a business broker that specializes in Medical Practice sales such as Palladium Business Brokers  

Get Legal Support:  

A solicitor experienced in Medical Practice sales should be used. Ensure all legal documents and contracts are reviewed by experts familiar with healthcare sales. Pay close attention to details and healthcare regulations to protect everyone involved. A professional expert in each of these fields will bring experience, information, ideas and solutions that are not always obvious at first and can help guide the seller through any steps, processes, and concepts that they are unfamiliar with.  

Stay calm and focused and be patient during the sale process. 

This process unfortunately can take time. It is important that you prepare thoroughly for selling. We need to be certain that selling the practice is what we really want to do, and that the practice is ready to be carefully examined by potential medical practice buyers.  

Thorough preparation for a Medical Clinic sale reduces the risk that things will go wrong in future (where it can prove to be a lot more expensive). If the process is too rushed, major factors can be overlooked which can delay and interfere with the progress of an interested buyer or give them a reason to offer less money. 

Starting this preparation early allows us to increase the chances of getting the sale price and the outcomes the seller seeks. 

Provision of a Smooth Transition :  

After the sale and settlement and during the transitional stage, the previous owner will be expected to support the new owner by assisting with patient handovers, staff communications and information and sharing management and operational knowledge. A smooth handover helps maintain the Medical Practices goodwill and reputation. 

Selling a Medical Practice involves careful planning, seeking advice from experts, and maintaining transparency throughout the process. By referring to all the above-mentioned, this can help to navigate the sale successfully and ensure a positive outcome for both the vendor and the purchaser of your Medical Practice. 

Get in touch with our specialist Medical Clinics sales team at Palladium Business Brokers.  

We pride ourselves on our experience, expertise, honesty, integrity and excellent client service.  

Written by

Dr Philip Baker

As a former healthcare professional of 28 years, Dr Philip Baker is now a registered Sales Agents Representative and Business broker. Philip has been involved in numerous sales and purchases of large successful dental clinics. Philip is a Licensed Agents Representative and a member of the REIV and is also a member of the Australian Dental Association (35 years), Australian Institute of Business Brokers. Phil’s extensive experience and knowledge, along with his professional manner will help his clients achieve their ultimate aims and help achieve successful sales and purchases for their health care businesses.

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