Are you psychologically ready to sell your practice?

Journal of the American Chiropractic Association, May 1999 by Hadley, Chris

Are you considering selling your practice? Do you wonder if you're doing the right thing? What are you going to do after you sell? What about your patients? Will they be cared for with the same dedication you have given them for years? What is your practice worth?

These are just some of the questions professionals ask themselves as they begin to address the subject of selling a practice. Often the reason to sell greatly influences the answers to many of these questions. Retirement or permanent disability are two of the most dramatic reasons, but career changes, relocation, and burnout can also be very emotionally dramatic.

The value of a chiropractic practice when it is sold varies, depending on the reason for selling. It's always worth more when the selling doctor is ready to relinquish his/her patients to a buyer under the most favorable financial conditions (the "adult" business stage). If the practice is in the "mature" business stage (declining financial condition by comparison with previous years), the question can become, "How quickly can we sell it?" If it is still in the "adolescent" business stage, the question is, "Is now the time to sell it, or should I wait a couple more years?"

The following cases are real practice sale examples of doctors in different parts of the country. The doctors , names have been changed and some of the details have been modified to protect the confidentiality of each circumstance.

The Decision to sell

The first step is the decision to sell. After talking to family members and contemporaries, the decision to go forward with the sale is made or deferred to a later date. If you decide to sell, the process begins. What is the practice worth? What do you ask for it? How much financial information are you comfortable releasing to potential buyers? What loose ends must be taken care of? What will happen to your staff? What kind of buyer are you willing to consider? Will you sell it yourself or seek an independent consultant/broker to help you with this process? What is the minimum price you will accept?

These are all important questions when deciding to sell. But there are other, unexpected, questions that may become even more important in the selling process. They can help or hinder the selling process, delay the sale, or actually shut down any opportunity to sell the practice. Some of these questions are addressed in the following four case studies.

Accepting Closure of Your Career

The most traumatic and difficult practice sale situation can be when the doctor becomes physically disabled, as a result of either an accident or an illness that results in total disability. We are never ready to address issues that come up when disability occurs. One doctor in the Midwest, whom we will call Dr. Sad, was confronted with this situation when involved in an auto accident that resulted in permanent injury, rendering him unable to practice. During the first few months after his injury, he felt that he could recover, so he asked another chiropractor to see his patients during the rehabilitation period. That worked for a while, but the practice office hours were shortened because his peer was available to see Dr. Sad's patients only two days a week. The result? Patient visits and revenue began to drop while expenses stayed the same. Dr. Sad had to change strategies, so he advertised for an associate.

There were several responses to his ads-mostly young graduates with little or no clinical experience in private practice. After several interviews, however, Dr. Sad selected a young doctor, Dr. Associate, who had been in practice for a short period of time. After a few months, this relationship began to fall apart. Dr. Sad's priorities were focused on his health problems and his mind began to wander more toward his own financial needs, rather than toward re-establishing the practice. Because his original objective of maintaining or rebuilding patient visits and cash flow was lost, Dr. Associate became bored and frustrated.

Dr. Sad was afraid his associate might leave the practice, so he contacted a consultant who recommended that he sell the practice to Dr. Associate. Dr. Sad was seeing the practice "go down the drain," but did not know if he wanted to quit practicing. He was dealing with his injury and had not yet prepared himself to talk to Dr. Associate about buying the practice. He was now forced to admit his professional career had ended. The psychological process of selling the practice that Dr. Sad went through in the next few weeks became more disabling than his physical injury. With the help of his spouse and his financial advisors, he got through the negotiation of a sale price and the actual closing process.

Dealing with Burnout Anxiety

Similar to the situation just described, Dr. Burnout, a Southwestern chiropractor, found himself dealing with the financial aspects of his practice-which was unfamiliar territory-both during the selling process and after the sale. Although the sale process went reasonably well for Dr. Burnout, it became apparent during the negotiating process that he really knew very little about the financial operations of his practice. Never having been a businessperson, he had left all the financial dealings to his office manager, who ran that side of the practice. Dr. Burnout often deferred financial decisions or their analysis to the officer manager because he didn't want to get involved with such details.