Questions on selling a practice

[bluetigerpaw4]

What are the considerations for selling a private practice?

How do you determine a value?

What is included in the sale (client list, files, furniture, etc.)? What about confidentiality?

How would you handle outstanding gift certificates?

Any other information would be appreciated.

 

[picazo77]

Questions on selling a practice

What are the considerations for selling a private practice?

How do you determine a value?

What is included in the sale (client list, files, furniture, etc.)? What about confidentiality?

How would you handle outstanding gift certificates?

Any other information would be appreciated.

I am in the process of trying to purchase a practice, and have thus received a crash course on these topics. Please note that the info I provide is more "rules of thumb" and suggestions, as there are other ways to address these issues.

The considerations vary, but as the seller you need to fully vet prospective buyers. Get proof that they can pay you in full and/or finance the deal before signing it over. Make sure they are the type of person that can make the business work if they will pay you off over time. Put together a list of things they will need to have in place before the business can be signed over: business type (LLC, sole proprietorship, S Corp, etc), tax ID #, licensing, background check, insurance, landlord approval, accountant, ... EVERYTHING. If they don't want to do the work to prepare, they probably aren't good prospects to follow through on paying you.

Value may be determined as a % of sales, or a % multiplier of profitability, or really whatever you want.

You and the buyer negotiate what is included in the sale. Any assets included need to be fully listed and agreed to before the deal is signed. It is standard practice to require confidentiality agreements to be signed before discussing the details of your business. Until the deal is signed, you completely protect client and employee confidentiality.

Outstanding gift certificates are liabilities that go with the business when you sell it. The new owner will be liable to honor them if redeemed, so it is standard practice to adjust the sale price depending on the $ value of outstanding gift certificates at the time of sale.

I got a ton of help by reading up on franchising (Street Smart Franchising is a great book!) and business transfers, talking it over with accountants and lawyers, with business owners that had bought/sold businesses, with advisors from SCORE, and so on. There are a million ways to work a deal to your advaneforum.xxxe, and some aren't obvious to the first-timer. As a result of the homework we did, we're getting GREAT terms on a business, and the sellers are happy too - WIN/WIN!!!

Good luck!

 

[Suz C]

Thanks, Jason.

I actually may have a buyer, a therapist I had been mentoring while she was in school, and who is now trying to build her business within my space on certain days and hours. I am still trying to help guide her along, and I feel she would be a good person to take over my business when the time comes.

 

[rach rach]

Two cross-threads:

how to sell a 13 year practice

Wanting to purchase an existing Massage location

One other thread, What Would You Do in This Situation?, has a portion almost at the end of the first page that talks about purchasing a pratice and flows into the second page. It may also be of help. Below is the quote from the point where the thread turns to purchasing a practice (so you know what section you're looking for):

I wasn't sure anyone still cared... Good to know y'all are still with me... LOL!

Next 'dilemma' - and I haven't got the first clue on where to post this, so maybe someone can offer directions... Here's the situation:

There is a long-standing massage school in my community (been around for many years, trained most of the MTs here); the owner of the school also had a private practice and a student clinic at same for many years.... later, decided to operate the school out of her home, so she sold her successful business (private practice part) to one of her students. When I started practicing in the city (was in neighboring suburb for first year or so), I rented space at this business for six months or so, before I found my own location.... haven't really been in close communication with the owner since then, though I've seen her a few times over the years. I have remained in close contact/friendship with original owner/massage teacher all along... Anyway... cutting to the chase... gave teacher a session the other day, after which she mentioned that Karen (current owner) is planning to move in a few months and is contemplating selling her practice, and that I was "at the top of her list" regarding an MT that she'd feel comfortable selling to....

Karen's got over a hundred regular clients, and the business name itself is well-respected in this community, having been 'around' for the past 15 or so years.... So.... What do y'all think? Have any of you purchased an existing massage practice? How does this work, since I'm guessing that there are no guarantees that her clients would automatically come to me, simply because she 'endorses' me and sells me her business... And, of course, what would be a reasonable sum to pay for such a list? I don't think she's got much in the way of furniture/supplies/etc., though I do think she's got at least two massage tables, couple of reception chairs, desk, filing cabinet, etc.

I've just leased a new space (5 year term), and am currently renovating it ... So, if there are any major changes that are going to happen with my massage practice, this is actually a perfect time for them to happen, especially since I don't yet have a sign on the building and I also happen to be out of business cards at the moment...

I'm meeting with Karen in a few hours to discuss this... so... I am really glad that I live in an abundant universe... I'm waiting anxiously for your responses...

Monica