Selling your Practice

The ophthalmic industry is in a state of significant upheaval and transition. It is gradually moving from a diverse range of smaller providers towards consolidation. This doesn't mean of course that there is no place for the smaller independent practitioner. It does mean, however, that many practices are increasingly faced with the decision of whether to sell or continue on. If you choose the latter, there is much you can do to develop your business and carve out your own niche. But if you get to the point where you decide that it's time to sell your practice and cash out, there are lots of small things you can do to guarantee maximum return on the asset you've spent so many years building. Let's examine some of the more important issues.

Start Planning Early

At the outset, it's important for you to sit down and do some serious thinking about what exactly you want from the sale. On average, once a business is on the market, it will take about a year to find a buyer and complete the deal. If you know you'll want to sell by a certain point in time, you should start planning for it at least a couple of years in advance.

Shape up your financials

Cash is king. So the most essential step you'll want to take is to have your accountant clean up your income statement. Make sure your financial records have been kept accurately and in detail. You're most likely using a computerised accounts system, so make sure that it is in order and that procedures are documented. Be ready to explain any unusual figures.

Shape up your documents

Ensure that all legal documents relating to your practice are up to date and accurate. These may include leases, hire-purchase agreements, client and supplier contracts, staff contracts, etc. 

Shape up your business

Target your more obvious weak points and bring them up to par with the rest of your business. This may involve renovating your rooms, expanding your client base, updating equipment, balancing stock levels etc.

Communicate with your staff

Be honest with your staff - let them know that you're planning to sell, and that you'll do your best to ensure that they can continue with the new owners if they wish. At the same time, try and give more responsibility to senior staff members - it's best if the practice doesn't appear to depend too heavily on your own involvement.

Provide information to buyers

Prepare detailed information on your practice - cover everything, such as day-to-day operations, information on your competition, relevant industry information, research and development issues and a history of your business. You should also include information about any software you use, with manuals and instructions and what back up procedures are in place. This is particularly important for independent buyers. If you sell to a large corporate chain, they will most likely have their own software and procedures. But for individual buyers, they will want certainty that they can continue to operate the practice as a going concern.

Consider who you want your purchaser to be

Who do you think will want to buy your practice? Will you sell to a corporate chain and if so, do you have any preferences as to which one fits your culture? Are you willing to stay on yourself for a few years, and if this is actually your preferred option, is that an opportunity that would be available? Is there instead someone internally who might be interested? Do you know someone who you can employ with a view to them buying you out in the future? Are you interested in a gradual buy out? Answering these and similar questions about the kind of purchaser you are willing to sell to will assist you in determining your next steps.

Be aware of other costs that might be involved 

Find out as much as you can about the costs associated with selling your practice. You need to take these into account when considering how much you want from the sale. They can be significant. You'll want to know whether any Capital Gains Tax (CGT) is payable, but even more importantly, there may be things you should be doing now that might save tax at the time of the sale. For example, are you eligible for the Small Business CGT concessions and if not, is there anything you can do to change your eligibility? You might also want to know what your GST obligations are on the sale. You wouldn't want to find out that you have to remit 10% of the sale price after the contract for sale is signed.

Use professionals

Use the professional guidance of an accountant, lawyer, business broker, business appraiser/valuation expert, tax expert and/or banker or other financier.

We can help! Call Dewings on (08) 8291 7900 if you are planning to sell.