Don't Roll the Dice When Selling
fix this practice
Don't Roll the Dice When Selling
In a buyer's market, consider these steps to sell your practice.
Richard S. Kattouf, O.D., D.O.S.
Q: As a senior O.D. I want to sell my practice. I placed it on the market myself, and it's been available for more than 18 months. Now, I realize optometry is a buyer's market, but there have been very few inquires. Your advice on selling would be appreciated.
Dr. M.L. Crouse via e-mail
A: There are thousands of practicing O.D.s older than age 65. When it comes to selling their practices, many of them are rolling the dice with no plan or exit strategy.
It is important for sellers to understand that the market for optometric practices is poor. It is a buyer's market due to a great number of practices available and few buyers. This is a frustrating situation for senior doctors who graduated at a time when it was a seller's market.
In a down market, a seller needs professional assistance. As a practice broker and consultant, these are the steps I recommend you follow to sell your practice.
► Retain a broker. Most people who sell a home or building use a broker. It is the broker's duty to find the buyer. The broker also negotiates the buy-sell agreement prior to having an attorney put it into a legal document. The broker must be proactive in finding buyers and explore all possible options, including optometrists from the military, residency programs, new graduates and other O.D.s looking to purchase a practice.
It is important to let the broker do his/her job. The reason: As optometrists, we cringe when patients purchase pre-made or Internet spectacles. This is because we know that eye health and proper product services require a professional. Selling your practice is no different.
► Hire a professional to perform the practice appraisal. You would not purchase or sell a home or a building without a current professional appraisal. The same holds true for a practice. Many times, the broker can appraise the business or provide assistance in providing an appraiser.
It is my hope that O.D.s stop attempting to appraise their own practices. A valid appraisal includes furniture, equipment, inventory, accounts receivable and goodwill. With little experience and an emotional attachment to the practice, how can an owner be fair, equitable and an expert in this process?
► Ensure that all potential buyers negotiate directly with the broker. You, the seller, must stay on the sidelines. The seller of a home does not discuss the sale with potential buyers. This is the broker's service. Some buyers get over-anxious and break this cardinal rule even though brokers will have an agreement with the seller that includes a listing time frame. Such interference destroys the negotiation process and complicates relationships. Therefore, when you retain a broker, do not reach out to the buyer for any reason.
► Be prepared to pay an upfront fee for the appraisal and the buy-sell agreement. This fee will be deducted from the agreed brokerage fee once the practice is sold.
► Rely on the broker to identify financing options. Several reputable lenders will loan 100% of the selling price to the buyer. It is the broker's obligation to reference such lenders. In addition, the broker can negotiate the opportunity for the seller to act as the banker.
Selling a practice is a big business transaction that can range from $200,000 to millions of dollars. To avoid costly mistakes, use professionals who offer the expertise that you require. OM
|DR. KATTOUF IS PRESIDENT AND FOUNDER OF TWO MANAGEMENT AND CONSULTING COMPANIES. FOR INFORMATION, CALL (800) 745-EYES, OR E-MAIL HIM AT ADVANCEDEYECARE@HOTMAIL.COM. THE INFORMATION IN THIS COLUMN IS BASED ON ACTUAL CONSULTING FILES.|
Optometric Management, Volume: 47 , Issue: May 2012, page(s): 22