BUSINESS INSIGHT Selling points FINANCE T Practical advice when the time comes to hand over the keys to your practice by lloyd manning here comes a time in the life of every chi-ropractor when age has taken its toll and it is time to lay down the instruments, the activators and the tools for practice, pack the bags and move on. After many years of professional practice, many find this a diffi-cult realization. Still, it must happen and the practice will likely have to be sold. The first step in selling is coming to the realization that your chiropractic practice is not the jewel to another that it is to you. The second is ensuring that you are selling something that has a tangible value, not just pie in the sky. As with any professional practice, you are selling mostly goodwill. That’s a tough call at the best of times. Tradi-tionally, sellers base their price on past performance. Buyers buy on potential, yet will only pay a price that is based on the practice’s history. It is important that you sell your practice when it is still viable and profitable – not after all the good has been drained from it. It must be capable of creating value for the buyer and developing a return on the investment. Price and value must be equal or, better yet, value ex-ceeds price. A practice that is in decline, is poorly located, encumbered with a poor lease, or has obsolete and worn-out equipment will never command top dollar, if you can sell it at all. Setting a price that is fair to both you and the buyer is one of the more difficult parts of the selling process. There are many rules of thumb kicking around, most of which are worthless. They fail to take in most of It is important to sell your practice when it is still viable and profitable. LLOYD MANNING is a semi-retired business appraiser and financial analyst who is now a freelance business article writer. He resides in Lloydminster, Alta. He can be reached at [email protected]. 28 Canadian Chiropractor April 2016 the contingencies. Unfortunately, there is a distinct shortage of professional practice appraisers. Traditionally, accountants do this. Usually, they establish market value by discounting the historical earnings and add the book value of the tangible assets. Before paying an accountant, check with the pro-fessional practice and business brokers in your area. They can give you a good idea of what chiropractic practices are selling for and the probability of yours selling within a reasonable time. Of course, the brokers are seeking a listing, and as such, will be optimistic about the price and the time required to sell. When it comes to selling your practice, remember that you are working into a restricted market. Each potential buyer has a specific purpose in mind. Only another chiro-practor, or a larger clinic with several chiropractors that wants your patient base, will buy your practice. A younger practitioner may buy rather than start from scratch. A different one may want your location and your lease, and so forth. Your first step is to determine not what the poten-tial buyer wants, but why. This will guide your entire selling procedure. Before any potential buyer will say “yes,” this person or www.canadianchiropractor.ca Photo credit: Fotolia
Chiropractic + Naturopathic Doctor April 2016: Page 28
