Chiropractors looking to exit the profession or transition into a different situation frequently contact us or attend one of our webinars to discover how to sell a chiropractic practice.
It is certainly tempting to try to sell your practice yourself, especially if you look at a chiropractic practice broker’s commission or transition consultant’s fee as an expense that will decrease the proceeds of what you take home after the sale. On the surface, the transaction also seems simple enough to some who guess that they can quickly learn how to sell a chiropractic practice.
For those looking for information on how to sell a chiropractic practice, I will give detail on the necessary steps below. But I will also be clear: certainly, a few sellers have been able to navigate a “do-it-yourself” transaction and you might be the kind of chiropractor who is able pull this off as well. But for most docs, this is not a do-it-yourself project most chiropractors can or should undertake.
How to Sell a Chiropractic Practice in 7 (Not-So-Simple) Steps
- Start Sooner Than You Think. One of the most difficult obstacles to overcome for any seller (regardless of whether you sell by yourself or with assistance) is starting the process too late. Put simply, if you plan to sell or transition your chiropractic practice within the next 0-3 years, you should have already started or start the process now. Selling a practice takes time to walk through all the steps and to find the right person. You want to allow enough time to go through your transition without being rushed into a bad decision and allow enough time in case a would-be buyer fails and you are forced to start the process over again. So start sooner.
2. Consider Your Options – are you willing to sell your practice and walk away into retirement or to another scenario? Or would you prefer to have an associate buy you out over time? Or perhaps you’d like to take a bit of both routes, where you sell your practice and then switch roles to continue working for the new owner, as their associate (we call this the Sell & Switch). Despite what some chiropractic practice brokers say, there is no “best” transition option; but there are options that fit your situation better than others.
3. Value Your Practice – Because you don’t have the experience or perspective of selling many practices, you are very likely to incorrectly estimate your practice’s value and cause problems. On one side of the fence, DIYers err on the low side and therefore sell their practice for much less than the “fair market value.” On the high side of the fence, sellers price their baby way too high and never find a buyer or a willing lender who will enable the practice to sell. Understandably, your chiropractic practice value is an emotional issue. However, properly valuing a practice is a key to your successful sale. That’s why when we work with a client to get a chiropractic practice valuation, we value the practice from multiple angles and show you the range of what your practice is worth so that you can make a confident and competent decision of how to best price the practice.
4. Find Your Buyer – Unfortunately, the majority of chiropractors who try to figure out how to sell a chiropractic practice and then attempt it themselves do not ever get out of the starting gates for their sale because they don’t know how to find the right buyers. The average owner puts an ad in their local state association and maybe a few feelers out in the community or among friends (which can be dangerous, as it breaches your confidentiality). Then they wait and wait for a buyer to appear. But chiropractic practice sales is a numbers game. Without enough demand, your practice won’t sell. I’ve spoken to many chiropractors over the years who have attempted to sell their own practices unsuccessfully and most will tell me that they received a few or a handful of inquiries. Certainly, you only need one buyer but it’s highly unlikely a small handful is enough to find a great fit. (On the other hand, our current “record” is delivering 82 prospects for one of our clients who was looking to sell their practice. Obviously, not all were a great fit for the sale, but having a large number of prospects will help you avoid that desperate feeling that you need to take any offer, no matter how bad it is.)
5. Negotiate Price & Terms: once you find a prospective buyer, the work is certainly not done! You and your buyer will need to agree on price and terms. Or more specifically, negotiate your price and terms, since most buyers naturally want to pay less than you are asking. Here again, experience helps not only navigate the negotiations process by knowing when to “push back” and create a counter-offer but also in knowing when to push forward towards the sale and a win-win situation.
6. Financing Your Finish Line: if and when you get an agreement on price and terms, all is not over yet, because most buyers will require some sort of financing. Here we see many well-intentioned DIY’ers who *think* they have figured out how to sell a chiropractic practice botch their business sale by sending their buyers off on a scavenger hunt for a bank. Here we have a classic case of the blind leading the blind in that the seller rarely knows any banks that would potentially lend but his or her own and the buyer is in the same boat or worse. Worse, the reality of the buyer’s student loans, work history, available down payment, credit score or other important financing factors will cause many banks to want to pass up your buyer for a lower risk loan prospect. At that point, you are left with an agreement on the price but no way to fund the sale. (This is why we work with our clients and their buyers to get them qualified for a loan, by matching the buyer with proven banks who are ready and willing to lend to chiropractors for practice acquisition loans based on their financial profile.)
7. Contract & Post-Transition Details: If you’ve been fortunate enough to make it this far into your sale without expert help, you probably need to check your sanity if you want to proceed to write and sign a contract without an attorney at least reviewing it. Furthermore, many DIY docs find themselves surprised at how many details await them at the end of their sale or agreement – including the proper transition of business entities, state requirements, patient notifications, providership transfers and a dozen other details you never thought about (because you haven’t done it before). And yes, that means that your sale really isn’t over the day you sign – even if you have money in your hands. You will have to attend to these details or face fines, tax troubles or some turbulent times after your practice changes hands. (If you’re wondering, yes, we help our clients with both of these details too – in terms of contracts, agreements and after-sale items to make your transition smooth!)
Three Big Questions Before You Put Your Chiropractic Practice On the Market
If the laundry list showed you how to sell a chiropractic practice AND didn’t scare you out of selling your practice yourself, consider this. Before you put the above steps for how to sell a chiropractic practice into motion, you should answer these three very important questions:
- Is No Sale An Acceptable Option? Note the language from above when I stated that you “might” be able to successfully complete your practice sale. I did not say that every chiropractor can – or even should – sell their own practice. It’s a questionable achievement that some chiropractors can accomplish, without any experience and/or assistance. And it’s certainly a transaction many would NOT be able to complete. So your first question to seriously consider is this: is maybe an acceptable option when it comes to selling what is probably the single largest asset that you own? In other words, if you can afford to sell or not sell your chiropractic practice (at all), then a DIY sale might be an acceptable risk you are willing to take.
- Is a Significantly Discounted Sale Price an Acceptable Option? The second very important question to consider in learning how to sell a chiropractic practice is in regards to whether or not you are financially able to afford a significantly discounted sale price. Just as in real estate, research has show that “for sale by owner” businesses tend to sell for lower amounts compared to businesses that are sold by professionals such as chiropractic practice brokers or transitions consultants. This can be due to a number of factors, but primarily owners tend to price their practice incorrectly and be inexperienced at negotiations. This “deadly duo” can seriously decrease the value of your practice sale. Again, if how much money you get for your practice is not a compelling factor in your sale, then learning how to sell a chiropractic practice and doing it yourself may be something that you are able to tackle. On the other hand, if your retirement, your “second act” or your principles determine that you want to maximize the value of your proceeds from your chiropractic practice sale or transition, then doing it yourself is just plain dangerous.
- What will you do if you get stuck? Even if you decide that you are a candidate with enough risk tolerance to sell your chiropractic practice on your own, the next big question you need to ask yourself is simply “what happens if I get stuck?” In this respect, “getting stuck” can mean a number of things. You could be stuck or stalled at the start of your search for a buyer and obviously, no buyer means no sale. Or you could have found multiple prospects but are stuck in the stage of finding one who is actually financially qualified to buy. Certainly, you can even get stuck in the later phases of your sale or transition and get mired down in negotiations or in the contract phase. Regardless of where the stop or stall occurs, the do-it-yourself-er faces the same dilemma as they have either no Plan B to overcome their obstacle or no one experienced guide to get them through the process. And so, the sale is at risk of never happening.
I understand that most of you who read this post with the intention of learning how to sell your chiropractic practice are interested in doing so to save money. I hope that the above article not only showed you the steps for how to do this, but also illustrated how working with a chiropractic practice broker or transitions consultant to sell your chiropractic practice will actually SAVE you a lot time, stress and money – as well as ensure that your sale goes through smoothly and successfully!
If you’ve been wondering how to sell a chiropractic practice, then I’d suggest you check out our Chiropractic Transition Webinars to help educate yourself more on the process and the parameters that can influence your chiropractic practice sale for the positive.
On the other hand, if you are still in that planning phase where your transition or sale may be several years away, consider getting our Ultimate Chiropractic Exit Strategy as a resource to help you in that direction.
And certainly, if after reading this post, you realize your time is NOW and that the do-it-yourself route may not be your best option, then I’d suggest you contact us about how to sell a chiropractic SMARTER so that we can discuss how to best strategize your practice sale or transitions timing so that you can work SMARTER getting OUT of practice and save time, stress and money in the process!