As a healthcare practitioner, if you have contingencies in place with an operating agreement, or if you have a partner, leaving the practice is a lot easier. However, if you are an independent owner – a true sole proprietor – there is more to plan for. You will need to start looking at your practice in terms of its value to a potential purchaser.
One very important thing to consider is your equipment:
- Is the equipment up-to-date?
- Is the equipment leased or owned?
- What is the equipment’s depreciation?
- Are the chairs, tables, instruments, etc. updated?
If these items are part of the sale, the practice will be more desirable. It’s also important to make sure any computer software is current, efficient and up-to-date.
It’s also advisable to put together HIPAA-compliant reports of patient demographics, such as average age, male/female ratio and the most common type of procedure, to name a few. In addition, a potential buyer will also want to see past tax returns to ascertain the income generated over time. Together, this will give potential buyer(s) an idea of the type of income coming in and how much the practice is worth. Ultimately, it will attract buyers more quickly. Keep in mind that when providing any information, it is advisable to have the buyer sign a Non-Disclosure Agreement.
Another potential concern is understanding the terms of your lease, if you lease office space. What are the clauses, specifically with respect to assigning the space to a new tenant, within the lease that may affect the new purchaser? Will he/she be able to pay the lease? Will the landlord agree to the assignment? Knowing this information in advance will make it easier to answer questions when they arise.
Likewise, what will happen to your employees of the practice when you sell? Do they have current employment contracts in place? What are the terms of the contract? It is better to know and be ready for the buyer than to not be prepared during the negotiation process.
Dot the i’s and cross the t’s to know everything about the specifics of your practice – not just the actual practice of medicine or dentistry – which incorporates the goodwill, your reputation, and the management of your practice. Work with an attorney, as well as your CPA, to help ensure all pieces are in place and all options are considered before moving forward to that next stage of your career or life.
Contact me at firstname.lastname@example.org with questions or comments.
Stephanie J. Rodin, Esq.
Rodin Legal, P.C.
Tel: (917) 345-8972
Fax: (917) 591-4428