After advising the owners of more than 20 physician groups, med spas and other healthcare services companies successfully selling their practices, and talking with hundreds more who were thinking about selling, we have seen owners running into some common hurdles that prevent them from maximizing value and finding the best partner in a sale.
Waiting Too Long to Start a Sale Process
We run into this all the time — physician owners approach us wanting to sell their practice and retire shortly after closing. The reality is that most buyers will want the selling owners, particularly if they are critical to overall production, to continue to practice for at least three years, but more typically five years, following the sale.
Not Using Sell-Side Advisors / Signing an LOI Before Engaging an Advisor
Business buyers always seek to "get a deal" when investing in a company. When sellers do not use advisers to level the playing field, they typically leave a lot of money on the table — often selling at a 15–30%+ discount to market valuations.
Experienced sell-side advisers level the playing field by evaluating the practice's financials, preparing comprehensive marketing materials, and reaching out to a broad set of potential buyers to solicit bids and determine market price.
Failing to Grow the Provider Group Leading Up to a Sale
In the years leading up to a sale, owners sometimes dial back their focus on growing their business. This leads to less interest from buyers and lower valuations. Buyers value businesses with strong, tangible growth opportunities higher than companies that are flat or declining.
Not Having Your House in Order
- Financials: Financials should be prepared by a professional CPA, preferably monthly
- Regulatory: Work with regulatory attorneys to ensure compliance with Anti-Kickback Statute, Stark Law, HIPAA, and state regulations
- Employees: Ensure all employee contracts are signed and compliant; review compensation of key providers
- Partners: Make sure you are aligned on timing, goals, and ownership with all partners
Selling from a position of strength and hiring experienced advisers will allow you to get the highest price for your practice, find the best partner, and achieve your goals in a sale.
Contact Andrew Adams at andrew@bayshoregp.com to discuss further.