As medical practice brokers, we are often asked how the practice of transition works. Through our years of experience, we have found that sales practices run smoothly if someone follows a logical process and doesn’t try to “speed up” events by skipping steps. Successful sales continue through each of the following phases.
1. Assessment Practices
we provide comprehensive assessments that establish fair market values. The main information we see includes: call coverage, hours of work, overhead, years of service, gross income, competition, hospital admissions, desired percentage of Medicare patients, and established referral pathways.
2. Identifying needs
an analysis of the needs in the community and the patient base may identify a sub-specialty which would enhance the practice. This increases the marketability of the practice and helps target the pool of physicians which should be contacted.
3. Marketing the practice
we use a search of our physician files, direct mail, advertisements in specialty journals, contacts with residency programs, cold calls to new leads and other methods to locate the right physician to take over the practice.
4. Schedule an interview
we arrange for interested doctors to visit the practice site. We suggest both parties the main questions they should ask, the items to be reviewed, and what to expect.
5. Write a Real Money Contract
we work with prospective buyers to develop an initial proposal to buy the practice. All proposals are presented in writing in an earnest money contract. This contract outlines all aspects of the transaction from the tax allocation to the introduction period.
6. Negotiating details
negotiating prices and terms of the transaction into a win-win situation for both parties is the key to successful sales. We use our expertise for years to develop scenarios that benefit both sellers and buyers.
7. Removing contingencies
offers often are made contingent upon the occurrence of certain events such as having a CPA reviewing the financials, receiving temporary hospital privileges, or the arrangement of adequate financing. We work closely with all the parties to remove each contingency.
8. Preparing closing documents
we provide “sample” closing documents which reflect the terms agreed to by both parties. This reduces attorneys’ fees and assures all parties begin from the same reference point.
9. Closing
we follow each step of the transaction, working with the CPAs and attorneys involved, to assure a smooth and successful closing.
