Selling a practice – what the seller and the buyer need to know
I’m frequently asked to offer advice to sellers and buyers – possibly more often sellers as they have been around for longer and know who I am.
I’ve written previously about my conjecture that most sellers are in distress – they want to sell their practice because:
they need the cash to fund a divorce or a tax bill;
they want to reduce their debt;
they have had enough of three-letter acronyms – GDC, CQC, NHS, DOH, UDA/UOA;
they have had enough of people – either their team and/or their patients.
A few tell me that they have had enough of clinical dentistry – but they are a minority.
Of course, the conversation soon takes on the appearance of a scene from Antiques Roadshow, with valuers, consultants and acquisition managers (the experts) waxing lyrical about EBITDA – and the increasingly frustrated seller just wanting a simple answer to:
HOW MUCH IS IT WORTH?
When I’m called in to this scenario, I have a set plan of action:
Identify the distress;
Establish two important time horizons (and this is the point of this morning’s post)
Time Horizon #1 – for how much longer do you want to be the owner of a business?
Time Horizon #2 – for how much longer do you want to deliver clinical dentistry?
The answer to each time horizon questions can be different and will determine the next steps – either to call a corporate or an independent valuer for a private sale.
If you are considering selling – it is hugely important that you answer the time horizon questions before you start inviting people in to look at your numbers and your premises/team.
Once we have established your EXIT STRATEGY we can then decide who to call. Either a buyer who will lock you into an earn-out (suitable if you have years of clinical delivery left in you) or a buyer who will wave you goodbye on the day of the sale (suitable if you just want to get the hell out of Dodge City).
The answer to the HOW MUCH IS IT WORTH question may differ, depending on which route you take – but is that the most important question for you? Have you considered HOW HAPPY WILL I BE POST-SALE?
p.s. Private buyers would do well to take note of this as well.
Seek first to understand, then to be understood Stephen Covey – 7 habits of highly effective people