What Do You Have to Sell?
Many private practice owners have great clinical expertise and provide an outstanding patient experience. While these attributes are very important to the success and daily operations of the practice, they are not easily quantifiable. Whether an acquirer is a financial buyer or a strategic buyer, they are looking for businesses to purchase with monetary value to maintain or build on. The strategic buyer will want to maintain what makes your practice unique and invest in your brand for synergies beyond just financials.
Different types of Sellers
In some cases, a private practice owner may think about what is next and how to plan for retirement. In others, a practice owner may not be ready to retire but is looking for monetary value for pre-retirement planning or maybe to help send their kids to a great college. Both scenarios are very common and do not mean your time in private practice has come to an end. Often, buyers prefer that the previous owner stay on to provide a sense of continuity for the staff and patients, whether it be for 1-3 years or 10-15 years. The latter is an example of what we call “taking some of your chips off the table”. This strategy allows the seller to continue to work and run the business, but with the assistance and support of another organization.
Who is going to buy my practice?
The previously mentioned strategic buyer is a group like Access Physical Therapy & Wellness, who is already in the PT space, and looking to buy practices that fit into their culture and strategic growth plans. The reasons for the purchase may be to acquire a competitor that shares similar values and to build the brand in an existing area of operations, or to enter a new region where the seller operates.
Financial buyers are those looking purely at numbers and metrics of acquisition targets such as management stats, cash flow, return on an equity position and market share. Their main goal is improving the financial performance of the target company, for a consistent rate of return over the course of 3-5 years after purchasing.
One thing that both types of buyers typically utilize to value your practice is your company’s earnings, or the commonly used term, EBITDA. In our next blog “How to value my practice”, we will further explain what EBITDA means and include a concise explanation of how to calculate it.
For more information on selling your practice, please contact us today!
Sandeep Masih
Corporate Development Associate
[email protected]
845-636-4344 x163
