Top 5 Tips for Preparing Your PT Practice to Sell
With all of the consolidation that is going on in our industry, private physical therapy practices are going to have to make a decision on whether to grow by themselves or as part of a larger group. If you are considering joining a larger growth organization like ProEx Physical Therapy, these five tips are a great place to begin.
1.) Processes Not People
When you started your business, success hinged upon you personally. It was your entrepreneurial spirit, grit, clinical skills, and your ability to forge relationships that got the business going. But, buyers pay for sustainability and transferability, meaning if your business can continue to run successfully regardless of your physical presence, a buyer will pay more.
This is particularly important with new patient referral pipelines. If your referral sources (physicians or otherwise) only refer to you, personally, that is a huge risk. Think about ways to involve other staff members. When Mrs. Jones calls for an evaluation, but only wants to see you, talk to her personally about the benefits of seeing the other therapists in your practice.
2.) Be prepared, even if you have no intention of selling.
Make sure you have easy access to a wide variety of documents that a buyer will want. Tax returns, month end reports, leases, vendor agreements, payer contracts and personnel files are just a few of these. Buyers are willing to pay more for well organized, well run companies, and your ability to produce all of these documents at a moment’s notice will be quite impressive. Spending less of your, your staff’s and your advisors’ time on this will also result in less expense to you in the process of selling.
3.) Think about the future with each business decision
Every business goes through a major ownership or status change at some point. You may choose to be acquired, bring in more shareholders, merge with another organization, or simply close your doors. In either of the first three scenarios, having clearly outlined succession processes in your by laws or business agreement is key. Additionally, ensuring that there are assignment clauses in each lease, vendor agreement, and payer contract will go a long way to speed up any potential deal.
4.) Have great advisors
You will always need help from accountants, attorneys and other professionals, but you will rely upon them even more during an acquisition. Think of your advisors as your offensive lineman with you as the quarterback. You need to have full trust in the fact that they are experts in their field and will give you advice that will help you achieve your goals. Sometimes expert advice is expensive, but you often get what you pay for.
5.) Know your software systems
If you are a sole proprietor, chances are that you will personally do most of the legwork needed to get an acquisition through the due diligence phase. You might be hesitant to let your staff know what you’re doing or why, which makes perfect sense. If you can’t tap your office manager on the shoulder to help generate AR summaries or referral reports, then you need to know how to do it yourself. If an administrator is the only person in the system that can run payroll reports, take the time sit down and learn from him/her. Having the skills to generate every piece of information that a buyer may want to see will greatly reduce the time to complete a deal as well as save you a great deal of time and stress.