Selling a chiropractic practice in 2021 can actually be great timing for your business. Given concerns about the economy, the impact of COVID, the uncertainty of a new presidency and a number of other factors, this statement may surprise chiropractors.
But here’s why conditions may be present that make selling a chiropractic practice in 2021 to be an excellent and timely move:
NEW SBA LOAN INCENTIVES
To attract Buyers to the benefits of SBA Loan funding, the SBA put additional incentives in place this month that will go into effect with SBA 7a or SBA 504 loans starting February 1, 2021. If you’re not familiar with these loan packages, SBA 7a loans are commonly used to purchase a business (like a chiropractic practice) whereas SBA 504 loans are frequently used to purchase commercial real estate (like the building that houses your chiropractic practice). Starting in February, Buyers who utilize SBA 504 or 7a loans will get a number of benefits including (a) waived SBA loan fees and (b) no loan payments for 6 months! For more details, check out our other post on How New SBA Loan Incentives will Benefit Chiropractic Buyers in 2021. But the short version is this — these SBA loan incentives will make it much more attractive AND much less expensive for Buyers to borrow funds to purchase your practice. This in turn, makes some added attraction to selling a chiropractic practice in 2021 for YOU, as the Seller!
LOW INTEREST RATES
At the time of this writing, January 2021, interest rates are super low. When a buyer purchases a practice, the loan interest rate they will get is impacted by the Federal Reserve Interest Rate. Fortunately, the Feds recently had a two-day meeting on how to handle the interest rate in the light of the present economy and the decision was made to keep the Federal Interest rate locked at the same rate, which is currently 0.25%. Last year at this time, everyone was excited by the 1.75% federal interest rate – but obviously, that great rate got better and has stayed at the same level. How does that low interest rate impact you selling a chiropractic practice in 2021? Simple. Low interest rates aid buyers in borrowing money – to purchase YOUR practice.
HISTORICALLY LOW DOWNPAYMENT RATES
Buyers are also blessed by historically low downpayment rates offered by SBA Loans – these loans can be typically obtained with as little as 10% of the purchase price down (and we also work with lenders who will lend to buyers with as little as 5% down). This benefit has been in place for the last several years and continues to be a very attractive feature of SBA loans — which again help buyers borrow money to buy YOUR chiropractic practice.
THE UNEXPECTED COVID CRISIS BYPRODUCT BENEFIT TO YOUR SALE
There’s one final reason the selling of a chiropractic practice in 2021 may make great timing and great sense to you. It’s one that would have been tough to predict – but it is directly a byproduct of the COVID crisis that started in 2020. Since last year, we’ve seen a dramatic INCREASE in the number of chiropractic buyers that have entered the market looking for a practice to purchase. Historically, we track our stats and each year, we can anticipate a certain number of buyers and sellers entering the market. As the number of baby boomers hitting retirement is increasing, the number of Sellers has also been increasing. Fortunately, the number of buyers has been steadily increasing. Even though the pace of new Sellers is still outnumbering new buyers, the market was not completely lopsided.
However, last year in 2020, the number of Buyers entering the market looking for a practice to purchase significantly and exponentially increased compared to prior years! I can only attribute this to the fact that COVID caused many of these Buyers (who were working as Associates) to rethink their position in chiropractic and decide to pursue a purchase. This makes sense, particularly if you have a DC who has been an associate for several years and due to COVID concerns, either lost their job or saw their income dramatically decrease. If they have been pondering a purchase anyway, the fact that they now understand the only route to real wealth in chiropractic is to own your own business has made them consider buying. Couple that with a few years of savings, the desire for independence and freedom and you’ve got a buyer brewing. Add to that all the incentives and benefits you just read about above — now you’ve got a sudden spike in the number of buyers who are looking to purchase a practice!
For you, as a chiropractic business owner, this means one thing (again) — this may be great timing for selling a chiropractic practice in 2021!!
Certainly, I realize that there is a multitude of factors that go into the decision to sell your chiropractic business. But the “default” setting from many chiropractors these days is that they feel that it may be impossible to sell their practice in these COVID times. Admittedly, selling a chiropractic practice in 2021 is not without challenges. But that’s the case at any time and in any market. The real good news here is that selling a chiropractic practice in 2021 may be much better timing than you believed!!
If you’re on the fence about the issue of selling your practice, you may want to check our NOT READY YET webinar – for tips on how you can prepare your chiropractic practice now, for a sale later.
And if you’d like to learn more about selling your practice for maximum value or what it takes to get it sold, consider our EXIT ESSENTIALS webinar to learn the 10 factors that affect the value of your chiropractic practice.
Or just reach out and we’d be happy to help you!