The best time to consult with exit strategy advisors is actually before you start your business. The second best time is now.
When doctors in private practice sell their business to a larger corporation, they often lose out on potential profits. Larger corporations often know that private practice doctors are not prepared for an exit strategy, and take advantage of this by offering a lower price for the practice. This can be very detrimental to the doctor, who may have worked hard for many years to build up their business. Ideally, the preparation for an exit strategy should start at least 2 years prior to target date of exit.
The biggest mistake that entrepreneurs make is not defining an exit strategy. Without a defined exit strategy, you will have no way of knowing when the time is right to sell your business, or how to get the best possible price for it.
Another common mistake is not knowing the worth of your business. This can be a problem when it comes time to sell, as you may not be able to get the best possible price for your practice if you do not know its true value.
Another mistake that entrepreneurs make is not planning for taxes. When you sell your business, you will be required to pay taxes on the proceeds of the sale. If you do not plan for this, you may end up paying more in taxes than you need to. If you're a doctor like me, you want to learn the basics prior to consulting with a professional. This is where I think doctors should look to for the best possible education.
Many entrepreneurs make the mistake of not consulting with professionals when they are planning to sell their business. This can be a costly mistake, as professionals such as business appraisers, attorneys, and accountants can help you to get the best possible price for your practice.
Every business needs policies and procedures that are up-to-date, accurate, and adapted to their business. This is the reason most business cannot scale. I go into detail on that in this blog post. Selling a practice that can't scale usually means the larger corporation is only purchasing your patient list and your tax ID for your insurance contracts. However, if you do have processes and procedures that are used robustly, it changes the perception of your business.
Doctors need to be prepared for when they decide to sell their practice. This includes having a well-defined exit strategy, and knowing the worth of their business. If they do not take these steps, they may end up selling their practice for much less than it is worth and selling themselves short.
There are several steps that doctors can take to avoid this situation.
Firstly, they should define an exit strategy and know the worth of their business. This will require working with professionals to determine this. I do not suggest to take the first attractive offer by an institutions.
Second, they should also make sure that their business is in good shape, so that it will be attractive to potential buyers. This requires some preparation that may seem daunting at first, but little effort goes a long way, and can even double to triple incoming offers.
Finally, doctors should consult with professional advisors to get the best possible price for their practice. I know that a lot of doctors (myself included) have a hard time trusting business people so this can take some investigation. It is wise to interview several advisors and gauge their experiences in medical business exit strategies.
If you are a private practice doctor considering selling your business, make sure to follow these steps to get the best possible offers for the business that you poured your heart and soul into.
Here are some different types of potential advisors to search for. If you're reading this, and you've just started your practice and don't plan on exiting for another few decades, then it is the best time to plan for your exit strategy now. The best time to actually consult with these advisors is actually before you start your business. The second best time is now.
Professional Business Advisors:
-Exit Strategy Advisors
Exit strategy advisors are professionals who help business owners plan for and execute a successful sale of their business. They will work with you to maximize the value of your business and get the best possible price.
A business appraiser will determine the fair market value of your business. This is important information to have when selling your practice, as it will help you to negotiate a better price with potential buyers.
A financial planner can help you to plan for your retirement, and ensure that you have the funds necessary to live comfortably after selling your practice. They can also advise you on how to invest the proceeds from the sale of your business.
-Mergers and Acquisitions Attorneys
An attorney specializing in mergers and acquisitions can help you to navigate the legal aspects of selling your business. They can also assist with negotiating a fair price for your practice.
These are professionals who broker the sale of businesses. They can help you to find a potential buyer for your practice and negotiate a fair price.
An accountant can help you to understand the financial implications of selling your business. They can also advise you on how to pay taxes on the proceeds of the sale.
A tax advisor can help you to understand the tax implications of selling your business. They can also help you to plan for how to pay taxes on the proceeds of the sale.
Thanks for reading! Make sure to reflect upon this post if it applies to your day-to-day work/life and earn CME.
Is all this confusing and overwhelming? Don't worry, that's why I created Integrative Practice Builder. This is designed for doctors to learn from other doctors mistakes and create the best possible practice while avoiding burnout. It covers team leadership, psychology of business, and gets detailed on insurance billing strategies to help your patienst thrive. Click HERE to ceck it out!
This Journal / Blog Post Reflection is not approved for credit by CMEfy, however, you may reflect on how it applies to your day-to-day and engage to earn AMA PRA Category 1 Credit(s)™ from point-of-care learning activities here: https://earnc.me/pGtnXD