When you know, you know. If you have been a practice owner for a significant period of time, you may have felt that proverbial itch to sell the practice, retire and pursue other personal passions. That is, after all, the goal of most small business owners. But let’s say you haven’t felt that urge. You’re comfortable with your current professional situation, you enjoy owning your own practice, and you still have another 5-10 years before you’ll be willing to pass it on to the highest bidder.
Good. Because you need at least five years to prepare for the sale of your practice!
Generally, the more successful your practice is, the easier it should be to find a willing buyer. However, there are more factors at play. There is a very specific sect of buyers who are interested in purchasing an optometry practice. Of the thousands of ODs in the United States, there is maybe a handful that would be interested in buying your business, in your town, for your price. And of those, an even smaller percentage would actually follow through and complete the sale. To convince that tiny population of potential buyers, you need to thoroughly prepare your business for its sale — and that takes time, strategy, and investment.
Take Your Time
Selling your practice is a process measured in years, not months. To appropriately plan, assess, and sell your small business, you should be prepared to devote five or more years to the process.
Get an Appraisal
A third-party valuation of your business’ worth will give you confidence when it comes time to determine your asking price. A practice appraisal will provide a picture of what your practice is worth in the current market. Appraisals are also useful to ensure that your practice is properly valued should the unexpected happen, such as a debilitating injury or an unexpected associate buy-in.
Your business also has a personal value, and it is very likely that that value will be higher than the actual asking price. It’s natural for a business owner to artificially inflate the value of his or her practice. After all, you have sacrificed a lot to ensure the success of your business, and it is easy to exaggerate its value given all the long hours and significant personal investment. Keep this in mind when you take receipt of your appraisal and begin the process of determining your asking price. A typical value could be in the range of three to five times earnings before interest, tax, depreciation and amortization (EBITDA). EBITDA is a common measure from financial analysts and should help you set realistic expectations for the sale of your practice.
Keep Your Equipment at its Best
Of significant value to your practice is the equipment inside. The inclusion of up-to-date technology and equipment is a positive selling point that may just incentivize a potential buyer to pull the trigger for your asking price. Just as a kitchen renovation or updated curb appeal can reap return-on-investment rewards in the home-buying market, keeping your professional equipment up to date is a good tactic for convincing a hesitant buyer to sign on the dotted line.
Ensure a Smooth Patient Transition
An inherent value of your practice is your patients. You’ve worked tirelessly for decades to provide friendly, professional services that have endeared you to the community you serve. You are the face of the practice — which is why it will be important to the buyer that you help transition patients to his or her care after the sale. Be prepared to address this factor in the sale. Your buyer certainly will.