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10/10/2017 Jack Ressler, DPM
Invest in Time, Not Money to Sell Your Practice
It has been a year since the sale of my podiatric practice. I am semi-retired keeping a satellite office I work one day a week along with two retirement facilities. The reason I am writing this query is based on a lecture I attended at the last SAM convention in Orlando this past January. The lecture was given by a person representing a company who brokers the sale of physicians’ offices.
Simply put, they take your numbers and use a formula to value your practice. I found it very interesting looking around the room where the lecture was given. There were about 50 attendees and there was quite a change in mood at the end of the lecture and Q & A session.
What started as an upbeat audience turned into a lot of deflated podiatrists fueled by a very low percent of gross of what they can expect to make from the sale. I don't remember the averages but numbers like 10 % of their yearly gross were mentioned. Let’s face it, we all want and think our practice is valuable but sometimes we put an unrealistic price on the practice we worked so hard to build. What makes it worse is many practitioners contract with brokers and spend a great deal of money paying commissions and practice valuation fees making the net sale of your practice that much less.
When I made the decision to put my practice on the market, I did my research, made some calls, and decided to use an approach that I had not seen. I contacted my IT person to help me with the idea. We created a website that included many pictures of my office along with drop down tabs of each picture with a detailed description. We had several tabs describing demographics, equipment, type of practice and more. When finished, I inserted a classified ad in this PM News website. The ad contained a link that would direct prospective buyers to my website. There was a section with information on contacting me by going to an email address.
Due to confidentiality, I did not use my personal email address. Yes, this project took work but it did lead to the sale of my practice within one year and I was not at the mercy of a broker that would decide on the type of advertising along with where and when ads would be placed. The eventual buyer initially contacted me around three months into my advertising. I did use a lawyer specializing in medical office transactions and it was rather expensive (around $5,000) but at least that was money spent knowing my office was going to sell. I did have a nice physical office but not high tech.
My demographics were mostly Medicare and cash paying patients. No managed care. I did general podiatry and only very minor surgical procedures. My office grossed higher than the national average but by no means a mega-grossing office. The bottom line is I was able to sell my office for 70% of my gross collectibles. This was a number that was fair to me and the buyer.
Jack Ressler, DPM, Delray Beach, FL
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