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Is It Time To Sell Your Practice? 

The answer, of course, could be "absolutely not", "maybe", or "can I leave tomorrow?" However, this is not a decision to make on impulse, but also not one to leave in limbo for years. Neither is good for the owners or the practice. But how do you know when the time is right to sell your practice?

Here's a truism: Everyone will exit practice ownership at some point. The only question is whether it will be a planned transition or a crisis that leaves your practice and your family in chaos.

First, there are reasons not to sell now. For example, let's say you had a bad day yesterday, where your least favorite client regaled you with stories you didn't have time to hear or shared Dr. Google's medical recommendations. Or your best technician announced her family was moving across country in a month. Or maybe you found out that no one had kept up with price increases from vendors in the last two years on pharmaceuticals so your charges to clients have barely covered your direct costs.  

Everybody has bad days, and sometimes bad weeks or months. But annoying as they are, these are acute problems to fix in the short term, not long-term characteristics of practice ownership. You can prearrange for a team member to call you out of the exam room, and you can brainstorm how to find an experienced technician. System problems like out-of-date pricing can be fixed and avoided in the future if the problem is well defined, with both the solution and the responsibility acknowledged.

The reasons to sell are generally more obvious. If you're the owner who's itching to do something else in your life or make a career change between now and retirement, selling your practice is a logical first step.

If you're burned out and have been for a while, perhaps ownership just doesn't suit you after all. If practicing medicine is your passion but management is not, ownership may not be a good fit for you long term. Or maybe you are approached by a potential buyer who is looking to get a foothold in your community and is interested in your practice.

Developing your exit strategy. Businesses don't sell overnight. Unless you've got a strong buyer in the wings now, consider having a practice valuation or an owner(s)' analysis done roughly three years before any sale to help you see your practice as a potential buyer would. That can help you shore up any practice weaknesses and start the process of locating a buyer.

In a perfect world, you would have planned how to exit your practice at the time you became an owner. You would have set goals for how you'll want out, the price you want to receive for your ownership interest, and a timetable for how to transition from becoming an owner to turning the reins over to your successor.

If you're in the early stages of practice ownership, now would be a good time to set those goals. Knowing where you are going and when you want to get there make you much more likely to follow a straightforward path over the years ahead. However, for many of us, we live in a reality where we've always thought those plans would be nice to have but we've never quite finished (or gotten to) that project.

If that describes you, or the owner of the practice where you work, here are some thoughts to ponder. What do these scenarios have in common?

• Most owners lose interest in their practices at some point. Often, that means that they don't recognize or act on opportunities that come their way, and they turn a blind eye toward problems that creep up in the practice until they become crises.
   
• Some owners of established practices feel they deserve to cut back their hours and let their associate(s) and staff take over the bulk of the clinical (and sometimes management) work. That may succeed if the doctors and staff are actually trained and capable of taking on all or part of the owner's workload, without a resulting loss of clients or referrals. But often practice growth and revenue become stagnant or begin to drop.
   
• If the owner or spouse experiences a significant health issue and must be away for an extended period, can the rest of the doctors and staff take over on short notice and keep all the systems going, i.e., marketing, HR, scheduling, inventory management, internal accounting, etc.? If not, what would suffer?
   
• Is there an upcoming (or recent) change in ownership, such as another owner retiring or leaving the practice?  Is there a well-drafted buy-sell agreement that controls how the buy out will work and where the funds will come from? If not, will there be enough money for another owner to leave the practice?  Or will the doctors and staff observe that they are generating profits that go to retired owners and can't be reinvested in doctors, staff or equipment?

These scenarios all can reduce the value of the practice at the time when the owner most wants top dollar. Sell before these situations arise.

The solution? Don't drift into retirement - plan for this major life event in advance so you can use the last year or two to execute your plan, even if it means working a bit harder to make the transition succeed. Your team and your practice deserve it!