PUBLISHED SEPTEMBER 20, 2019
Many years ago I wrote and published Are you Thinking of Selling Your Practice, which presented the mechanical steps of the practice sales process. Since the year 1998 I have gained experience and feel compelled to share these experiences with doctors considering selling their Chiropractic practice. This article will not explain the concrete step-by-step process but highlight the emotional component of each step.
I speak to doctors nationally that intend to sell their practices for a variety of reasons. Most doctors envision that it is a one step process. Many doctors equate selling a practice to selling a chair on Craig’s List. Place a classified ad and someone will stop by drop off a check and take over the practice. The reality is this emotionally fearful process is made up of many small steps. Each step must be completed before moving to the next.
I often say that these small steps are like a dance. Having consulted countless Buyers and Sellers over the years I have learned the emotions held by each party at each step. If you have ever bought or sold a house you can relate to the emotional rollercoaster within the process. The development of the sale is predicable to how the dance will move, slowly and then increase speed hit a ruff spot and then hopefully make it to the finish.
UNDERSTANDING WHAT THE BUYER IS LOOKING FOR
Emotionally the sale of the Chiropractic Practice is unique for the Buyer and Seller. The Seller cannot sell his or her practice; the Buyer must fall in love with it, see them within the practice serving the patients. As Sellers vocalize what a great practice it is, the Buyer repels away from the deal. The Seller must sell the Buyer by being personally forthright and honest, not push their practice sighting how good it was for them. The Buyer is looking for the real value of a professional practice, which is the moral character of the Seller.
Below are the general stages of the sell process with my insight to some of the emotions of the Buyer and Seller.
STEP 1 MARKETING YOUR PRACTICE FOR SALE
When marketing your practice for sale your ad or post must stand out from all of the others. Buyers need to be drawn into your practice with the aid of technology. Promote your practice in a complete format; pectoral, statistically and demographically. I recommend a virtual tour on the Internet of the practice enclosing any and all pertinent information. The longer a potential Buyer views your information the more investment they have in purchasing the practice. Never hold back information, especially negative information. If a Buyer finds out about a negative aspect of your practice they will never trust you again through out the process. Always be forthright.
STEP 2 FIELDING INQUIRES
When a potential Buyer contacts a Seller to discuss the practice for sale the only question the Buyer should have is “what is the asking price” All other information should be presented within the on line marketing package. The goal of the Seller on the first phone dialogue is to invite to visit the practice for a physical evaluation. The Seller should not discuss the practice in detail on the phone, email or text. You will not be able to sell the practice by phone, but you can chase the potential Buyer away.
STEP 3 – BUYER VISITING THE FACILITY FOR THE FIRST TIME
Welcome the potential Buyer into the facility and let them walk around the facility alone. Leave them to fall in love or leave with no further interest. As a Seller sit at your desk and fiddle with some paperwork. Say, “I will be happy to answer any questions you may have” The hardest job for the Seller is to keep their mouth closed. The Buyer must be able to envision himself or herself as the doctor within this practice to make it to the next step. The Buyer should be given by the Seller any and all information pertaining to the practice, including all practice management financials, lease and employee contracts. All financial information is given to Buyer upon meeting for the first time, the Seller presents with honestly and good intention. The Seller will loose credibility when the Buyer continues to ask for pertinent information. This package must look well organized and very professional. The package is produced not only for the Buyer in mind, but the Buyers council, Attorney, Accountant, banker or parent.
STEP 4 – NEGOTIATION
The negotiation process has two stages, pre and post Letter of Intent (LOI). Discussion prior to a Letter of Intent is general in nature discussing price, terms, transition and non-compete. The Letter of Intent defines the intention of the Buyer. The relationship intensifies post LOI, as the Buyer scribes a general agreement and transfers funds as a good will intention. Once the general terms are agreed upon a formal Contract of Sale is crafted. The Contract of Sale defines all aspects of the transfer of ownership. Additional topics within this document include indemnification, accounts payable and receivable, transfers and other liabilities.
Emotionally each party should approach the negotiation process in a business like manner by transferring ideas and offers in writing, not verbal. The negotiation process is uncomplicated when both the Seller and Buyer have earnest intents, with a similar goal.
STEP 5 – EXECUTION OF CONTRACT
I recommend utilizing a professional that has experience in executing a health care facility transaction. Use a clean, readable, non-wordy document. Do not get sold by a Lawyer that this buy/sell transaction is bigger than it is. You may end up teaching your local Lawyer what is needed and pay for it in the process. This buy/sell negotiation and document are predictable to an experienced professional.
The execution of the Contract for Sale document is the culmination of your efforts. As the ink dries upon the contact and the funds are deposited into your bank account the transaction is complete…. no sooner. Now it’s time to look back and savor the moment of success and now work on your plan for the future.
ABOUT DAVID FOSTER D.C.
Dr. Foster has practiced Chiropractic for the past 28 years and has co-owned 12 satellite practices. His undergraduate education includes a BS degree from Boston University with a major in finance and marketing prior to attending Life Chiropractic College. With his acquired knowledge and experience Dr. Foster has consulted the Chiropractic community for past decades in appraisals, Buy-Sell and Associate agreements and strategic negotiations in addition to a wide variety of legal, financial and strategic issues related to the business of Chiropractic. For more information go to www.BackOfficeConsults.com or call cell 973-885-8078 or email Dave@BackOfficeConsults.com