By: Chase Howard
Thinking About Selling Your Practice? Preparation is key and the difference between a successful sale and seller’s regret.
Step 1: Call Your Financial Planner
- Be sure that you can afford to leave the business
- Most buyers will require a comprehensive non-compete and you should be certain that you are financially prepared to retire, sell, or move before signing any restrictions.
- You will also want to ensure that you are planning for the income you are about to receive. Are there vehicles in place or options that are best to ensure the purchase price is put to its best use for you.
- Consider post sale options if not retirement – are you going to be employed by the buyer? Are you selling to an associate and will phase out? Are you just moving and will need to find new employment/open a practice?
Step 2: Visit Your Accountant
- Your business is only worth as much as can be defined on paper.
- If a potential buyer cannot make sense of your accounts and assets, you may leave significant value on the table.
- Get your financial history in order by reviewing tax returns, profit statements, AR reports, and payroll history for prior 3-4 years.
- Clean up creative bookkeeping – you will have to promise the buyer that your financial statements are true and accurate.
- Have your accountant help value assets of your business – or use an appraiser if necessary.
- Discuss company structure – there may be restructuring needs or you may need to transition to a different structure for tax purposes.