Inc Magazine recently published an article on Why 2022 Might Be a Good Time to Sell a Chiropractic Practice which should be required reading for any chiropractor who is considering selling their practice in the near future.
To be precise, the Inc magazine article was titled “3 Reasons Why 2022 Might Be the Year to Sell Your Business” but there is some significant statements included in the article that definitely apply to your pending sale that should warrant your attention.
There are also a few subtle differences between the general marketplace for business sales and for chiropractic practices that I’d like to point out here.
The Three Basic Points
There are three basic points that Bob House, the author, makes for why 2022 might be a good time to sell a chiropractic practice – or any small business – and a few caveats that may need to be applied.
1.Businesses are Selling at Record Prices.
According to the data presented in the Inc Magazine article, the median price of small businesses grew 16% over the past year. While the available data on chiropractic practices is so small that we don’t even scratch the surface of such industry insights, here at the Strategic Chiropractor, we can confirm a positive sale trend for business prices. In fact, we’re happy to report that our practices, on average our selling for 93% of listing price. With that figure, obviously many listings go for 100% of the listing price. In addition, we’ve also noted that fewer Sellers need to offer any type of partial owner financing or “carry paper” than in years past. In other words, not only are the practices selling for a higher price, Sellers are getting “cashed out” more frequently!
So even though we don’t have the exact industry data to correlate with the findings in Inc Magazine, and we do not know what other brokers in the chiropractic profession are reporting, our experience here at the Strategic Chiropractor confirms a similar positive trend that the small business sale marketplace is seeing at large.
2. Increased Demand for Business Ownership.
The Inc magazine points out two primary reasons that more and more people are choosing entrepreneurship. First, they cite the fact that the Bureau of Labor Statistics reported that a record number of people lost or left their jobs in 2021. The second statistic Inc points out is that there was also a record number of entreprenuers applying for business applications. With no job, being self-employed becomes a viable option for income production and for independence. Purchasing a business then becomes a FASTER way to achieve those economic and freedom related goals vs starting from scratch) because when you buy a business, you get the revenue track record, history and momentum with it – all of which are nonexistent in a startup.
In the chiropractic setting, we’ve noticed a similar trend since 2020 – in terms of an INCREASED number of buyers looking on the market. It makes sense and correlates with the government findings cited above.
Picture the associate chiropractor who has been working the last several years for another DC and eventually hoping to own his or her practice. COVID hits and now the associate is let go and now unemployed. Because the associate really wanted to own a practice as their long term goal anyway, their plans are accelerated thanks to their now unenpployed status. They find that the interest rates are low, requirements for getting a loan are at a historical low and that they’ve saved enough money over the last several years to qualify for a loan to purchase a practice. Conditions are now ripe for these young associates to take a step towards their dream of owning their own practice and buying one makes great sense for the instant cash flow, independence and freedom.
From this angle, it’s easy to see why the number of buyers looking for chiropractic practices for sale have increased and why 2022 might be a good time to sell a chiropractic practice if you are on the other side of the fence!
3. Sellers Still Have the Market Advantage. On the third point made by Bob House in the Inc magazine article, I partially agree and partially disagree.
House cites the same basic rational explained as for the reasons that I just pointed out on why buyers looking for chiropractic practices for sale have increased and why 2022 might be a good time to sell a chiropractic practice. But at least in chiropractic, I believe there’s also another side to this story.
The number of SELLERS have also increased for two primary reasons:
First, the number of Baby Boomers hitting retirement age is still playing a significant impact on our small profession of chiropractic. While it’s true that Baby Boomers of all ages are retiring in all professions. Because we are such a small profession, there is a significant number of Baby Boomer chiropractors looking to retire. This trend is independent of the events surrounding the last couple years and will continue, independently of future events, until the waves of Baby Boomers eventually retire.
Secondly, this trend is compounded by the fact that some older chiropractors who were getting close to retiring – have chosen to hang it up early and sell their chiropractic practice.
- For many, the hassles and new hoops of practicing during COVID are too burdensome for the proverbial “old dog to learn new tricks.” Rather than go through all the necessary changes, some older chiropractors have chosen to sell.
- For others, the real estate market boom has shortened their time frame to retire and sell their practice. If their house or building can fetch a good price, they are either financially able to retire without practicing and/or have fewer concerns about the sale of their practice. So selling sooner while the real estate timing is right sounds better than waiting. And this has produced more sellers.
- Still others see that local lockdowns, state restriction or other undesirable living conditions that came about during COVID have caused the chiropractors to consider practicing in another state. This too results in the DC selling their practice to move elsewhere.
- Finally, for some, COVID devastated their practice and they don’t have the time or energy to build it back up – and they will try to sell their business.
CONCLUSION AND NEXT STEPS
As discussed above, I agree with most of the points made in the Inc magazine article and believe that most apply to both general businesses and to the chiropractic marketplace.
If we put all of these elements together and I would state that you do not have a Seller’s market – nor a Buyer’s market – in the traditional sense.
Instead, the last several years – and most definitely in 2022 so far, you have a very ACTIVE market (which, by the way, if you are looking to sell is preferable and positive to a dead market)!
In the end, however, an Active marketplace may just be the best reason why 2022 might be a good time to sell a chiropractic practice!
When you are ready to sell YOUR chiropractic practice, we’d be happy to help!
If you’d like to learn what it takes to successfully sell your chiropractic practice, check out our FREE webinars – where we will discuss the factors that affect the value of your chiropractic practice sale and help you do it right!