Are you considering selling your practice to a corporate buyer? Just as buyers have their process for selecting prospective practices to purchase, it is essential for you to do your own research before deciding on your buyer. By understanding what buyers are looking for, it is easier to make the necessary improvements and attain a higher valuation for your practice. This article will touch upon some of the most important factors that corporate buyers consider when acquiring practices in the healthcare industry.
Whether or not a corporate buyer is looking to switch up the business model once they buy the business, the first step they take to evaluate a practice is by looking at its accounting records. Reviewing the practice’s assets and liabilities helps them understand how well the business will sustain itself in the future. In addition, by analyzing the business’s revenues and expenses, they will assess the business’s future potential profitability and ability to maintain growth.
As customers are the most important aspect of any business, it is to be expected that factors relating to patients will have a significant impact on corporate buyers’ decision to acquire the practice. Buyers will not only look at how many active patients the practice has, but also consider how the patient base will be affected after the transaction. In most cases, if the practice owner is currently serving the majority of the patients in their practice, it is only to be expected that the patient base will have a toll when the owner departs. To evaluate how many patients will be lost, buyers look into how many current patients the practice owners are seeing, as well as some of the patient records of other providers in the practice.
It is essential for businesses to meet compliance and regulatory requirements. However, a lot of small practices tend to neglect legal and compliance regulations regarding their formation, HIPPA procedures, and employment policies. As a result, absence of such policies can lead to increased liability for the corporate buyer. With this in mind, buyers work with lawyers and other experts to investigate and evaluate the practice’s compliance before moving forward with the deal process.
One of the most common reasons that practice owners consider the sale of their practice is because they are preparing for retirement. The majority of the owners have come to the age of retirement but aren’t ready to let go entirely. To help both buyers and sellers ensure that the transition runs as smoothly as possible for the practice’s patients and employees, corporate buyers ask practice owners to continue running their practice for a few years after the transaction has been completed. This period is typically 2 to 4 years; however, terms can be negotiated during the deal process and is often given preference to the practice owners.
Location and market
As corporate buyers are looking to enhance their business by acquiring additional practices with growth potential, they are primarily looking to purchase practices in a highly visible location in an urban environment. Having said that, buyers will conduct research on the demographic, as well as competitors, to analyze how well the practice will perform in the future. In addition, buyers will consider factors that impact the demand for specific medical services, such as an aging population and the number of doctors in the area.
About Dwek Capital
Dwek Capital is a private equity and advisory firm that specializes in the healthcare sector: dentistry, dermatology, optometry, physiotherapy, and veterinary. We work with leading healthcare groups across North America to provide them with the best opportunities out there. If you are a practice owner that is looking to sell your practice and would like to learn more about some of the opportunities currently available, please contact us at firstname.lastname@example.org and our partners or associates would be happy to give you a free consultation.