Owning and operating a medical practice can be extremely rewarding (and profitable), but it also comes with a great deal of responsibility. If you are considering retirement or are simply looking to make a career pivot, it may be time to think about listing your healthcare practice for sale.

There are a few things that you as a healthcare practice owner will want to be proactive about before listing a facility for sale, especially when it comes to maximizing the sale price and avoiding any legal issues down the road.

Perform Financial Due Diligence

Before listing a healthcare property for sale, owners are strongly encouraged to perform a quality of earnings (QoE) analysis. This process, also known as due diligence, involves a detailed assessment of the practice’s financial statements and other documents. The main goal of a quality of earnings analysis is to demonstrate to potential buyers that the practice is, in fact, profitable and that its financial performance is stable. A QoE analysis can also help owners (and their agents) determine a fair asking price for the facility itself.

Know Where Business Financials Stand

When selling a healthcare practice, there’s a good chance the buyer will be operating on an accrual accounting basis. With this in mind, it’s a good idea for current practice owners to align their current accounting practices with that of potential buyers (if this isn’t the case already). Working with an experienced and knowledgeable accountant can be helpful here, especially when it comes to identifying addbacks and other perks that could boost the potential resale value of the facility.

Keep in mind, too, that documenting cash-free, debt-free transactions (as many healthcare transactions are) clearly could be critical to a smooth sale. Specifically, buyers will want to be able to see how transactions are structured when determining the sustainability of operations and profits after they purchase the practice.

Optimize Documentation and Reporting

In addition to performing a QoE analysis and knowing where the business financials stand overall, it’s also a good idea for healthcare practice owners to ensure their documentation and reporting is up to the highest standard before listing the practice for sale. This should include the use of efficient, secure and reliable Electronic Medical Records (EMR) and billing systems. Having these systems in place (in addition to a quality accounting platform) will demonstrate to potential buyers that the facility’s operations are efficient while streamlining operations in the process.

Start Working with an Experienced Financial Advisor

Last but certainly not least, it’s always a good idea to retain the services of an experienced and knowledgeable financial advisor before listing a healthcare practice for sale. In fact, this should really be done as early in the process as possible. Ideally, this advisor will be one who has specific and proven experience working with healthcare facilities, as this will ensure that they understand the nuances that go into selling a healthcare practice.

A knowledgeable financial advisor will be able to provide guidance on the value of the practice, tips for improving finances and reporting and other assistance when it comes to preparing a healthcare practice for sale. When meeting with a financial advisor to discuss selling a practice, it is a good idea to bring as much documentation to the initial meeting as possible. This should include financial statements, QoE analysis documents and anything else that may be relevant. From there, a financial advisor can begin reviewing the practice’s finances and provide additional guidance that can streamline the selling process and cut down on stress.

Preparing for a Successful Sale

Selling a medical practice may seem like a daunting task, especially with all the strict regulatory compliance requirements that are in place with these types of transactions. The good news is that with the right preparation and planning, facility owners can get through the process with minimal hassle.

One of the best things healthcare practice owners can do before selling is to make sure they have the right team of advisors on their side. This can make all the difference when it comes to deciding on a selling strategy, handling due diligence and much more. From there, all that is left to do is wait for the right offer and plan one’s next professional move.

 Corrigan Krause Can Help

Corrigan Krause has a team of professionals who specialize in the unique accounting challenges healthcare clinic owners – including quality of earnings reports. For more information or to become a client of Corrigan Krause, click here.