In Part 1 of the Chiropractic Practice Sale Marketing Mistakes to avoid segment, we discussed some common mistakes chiropractors make when attempting to attract a buyer or prospect.
Admittedly, it’s not an easy task to find a perfect fit for your practice style, location, timing, price and all the other criteria that will make a great match for your sale or transition goals. Because of that, some chiropractors and (worse) their chiropractic practice brokers (who should know better) make a HUGE mistake in the attempts to find that perfect prospect.
What I’m speaking about is confidentiality during the process of marketing your practice.
Why Confidentiality is VERY Important to Your Practice Value
In many respects, one of the largest assets you have in your sale or transition scenario is referred to as “goodwill.” Put simply, goodwill is the price tag put on the smooth transfer of your existing patients over to the new owner. In a perfect world, all the patients you are currently seeing continue to utilize the services of your buyer and “goodwill” is transitioned flawlessly.
Alas, the world is not perfect BUT you must make every attempt to transfer the goodwill to your owner, lest you run out of a practice to sell. In other words, if your buyer were convinced that NONE of your patients would use their services, they simply wouldn’t buy! On the other hand, the more your buyer is assured that these patients will be seamlessly transferred over to them, the more likely they will buy. And, in generally speaking, the more patients you transfer over, the more your practice is worth (this certainly is not flawless math, but in general, larger practices have larger collections).
So what does this have to do with marketing your chiropractic practice?
The Cost of Confidentiality
The confidentiality of your sale plays a key factor in your ability to convey a sense of goodwill to the buyer. Here’s why:
- Patient Panic – once a doctor announces that he is leaving, a certain percentage of the patients will immediately panic. If this is not handled well (via transferring patient care to the new doctor), then patients begin looking for your replacement. Obviously in the case of a practice that is still for sale, there is no new doctor (yet) to transfer patients to. So once patients learn the business is on the market, there is potential for them slowly, silently leaving your practice.
- Staff Anxiety – when your staff learn that you are retiring, selling or transitioning in some way, their first reaction will likely be anxious. They are eager to keep their income and are concerned for the security of their jobs. Yes, you can reassure them that you will “put in a good word” to the new doctor and encourage your successor to keep them on. But in the case where the word has leaked out before you even have a buyer, there’s little reassurance because you don’t know who the new buyer is (and neither do they). So your ongoing ad campaign to sell or transition your chiropractic practice provides an ongoing source of stomach upset for your staff.
- Colleague & Competitor Gossip – once a competitor learns that you are selling your practice, you can be sure that one thing will happen: they will talk about it. Even a well-intentioned colleague just chatting about the fact that this town is going to be losing a good chiropractor can do much damage. On the sinister side, a sale made public can create an easy target for competitors looking to sabotage your practice and, with it, your sale.
- Buyer Beware – It can get worse. If your practice has been on the market forever, you may be subject to what I like to call an “implied” confidentiality breach. Like the empty restaurant, many buyers will become suspicious of why no one has bought your practice. They may suspect that there’s something wrong and everyone else knows about it – in other words, the confidential information that your practice is a lemon has somehow “leaked out” to the public and that’s why it’s sitting on the market. Certainly, this is not always the case. But it’s tough to turn around public perception.
How to Prevent Confidentiality Breaches
The easy solution here is to just avoid all breaches of confidentiality when marketing the sale of your chiropractic practice.
In practice, it’s a bit more difficult unless you have a plan. For example, ask yourself how you would handle these typical marketing scenarios:
- What description are you going to use in your ads without breaching confidentiality BUT without being so vague that you don’t attract any interest?
- How will your buyers contact you? (Are you going to provide them with an email that can be read by staff, phone number answered by staff? Or a private cell number that you never answer or an email that is anonymous?)
- What kind of information will you disclose to your prospective buyer? (How much is too much info to give and how much is too little?)
- How will you protect the confidentiality of the information you do share?
- How are you going to determine that the “prospect” on the other side of the phone or email is truly a prospect and not a competitor, tire-kicker or another time waster (and potential confidentiality spoiler)?
The above questions should be seriously considered before attempting to sell or transition your chiropractic practice on your own as they could literally cost you thousands (or the sale entirely).
The OTHER Easy Solution
Fortunately, there is one additional solution – and it’s simple.
Don’t do it yourself. Don’t let your real estate agent handle it (they know nothing about business sales). Unless they have recent and relevant experience, don’t let your attorney, CPA or your Uncle Louie (who sold his practice in 1978) handle it.
Hire a professional, experienced chiropractic transitions consultant or practice broker.
Not All Brokers Are Created Equal
Unfortunately, even hiring an experienced professional can go wrong if you are not careful in what you are looking for.
First, there are many business brokers who know the ins and outs of how to sell a business properly. Most are members of a professional association (the largest of which is the International Business Brokers Association) attend educational events and trade shows just like you do to help keep current on your chiropractic skills. The challenge with a “generic” business broker is that they may know nothing about chiropractic.
Second, even if you find an experienced chiropractic practice broker, they may make a critical mistake in attempting to sell your practice by including pictures all over their website of your practice. While this sounds nice in theory and certainly can be helpful in allowing your buyers to see what your office looks like, it can be a disaster when it comes to confidentiality. When a broker does this online, not only can your buyer see your office, so can other DC colleagues in the area, staff and even your patients! Why? Because it’s readily available online!
Sadly, we’ve worked with two clients who attempted to sell their practice who fell victim to this mistake. The first tried to sell the practice by themselves and announced that he was selling the practice to his staff. His one associate doctor saw the writing on the wall that he would be unable to afford to buy the practice, promptly gave their notice and quit.
The next doc actually used a broker to sell her practice. But her broker posted pics of the office, along with a lovely video. One of her patients saw this online and point blank asked the doctor if she was selling her practice. The doc was caught off-guard and didn’t respond well to that question. The patient lost her trust in the doctor, left and told friends that the doctor was leaving. As you can expect, other patients followed to find a new doctor.
An experienced chiropractic practice broker who is smart enough to understand that the web is a powerful tool (if used properly) will have a plan to handle confidentiality competently and they will be able to effectively market your practice.
I’m biased – but if you need one, let me know because I’m also happy to help you sell your chiropractic practice 😉
NEXT STEPS
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