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Are you thinking about selling your physical therapy practice? If not, you should be.
I don’t mean you should move to make a sale happen right at this moment. However, you need to be thinking, now, about positioning your practice for a successful sale, even if you expect that sale to be years down the road.
I was recently talking with a friend of mine, Ben Barron, Director of Mergers and Acquisitions at Professional Physical Therapy. Ben is a physical therapist who now spends his time speaking with physical therapy practice owners about the possibly of acquisition. He’s been on both sides of the deal table, with firsthand knowledge of what it’s like to be acquired—and what makes physical therapy practices most attractive to buyers.
Ben has been sharing with our practice owners some fantastic and actionable information about how to build and grow your practice that will attract top-dollar value in a sale.
So, why do you need to start preparing to sell your practice today if you have no intention of selling anytime soon? On a recent call, Ben put it plainly:
“You can’t decide tomorrow you want to sell your business and then put it on the market the day after. That’s not going to get you top dollar. It’s not going to help you find the right buyer. And it’s not going to make the process easy.”
You’re working hard, making sacrifices, and taking risks to develop a thriving practice that serves your patients and your community, and is financially viable. You need to make sure your hard work and sacrifice pays off now AND down the road!
You must pay close attention to how you’re growing your practice today, so it not only gives you the lifestyle you want today, but the financial security you want when you retire.
There are 3 essential components that increase value in a physical therapy practice:
More profit equals greater value. Sounds like a no-brainer, right? As a practice owner, your mission is to maximize the profitability of your practice without sacrificing the quality care you’re delivering.
But many physical therapists have mental blocks about being profitable. They see being profitable as greed or selfishness. This mentality will keep you from having the lifestyle you deserve now, the culture you want for your staff, and financial security later on.
I’ve written before about how practice owners need to shift their thinking about profit. Here are a few mental triggers to upgrade your thinking:
- Think of your practice as a business. Businesses MUST make money in order to survive.
- Reorganize your weekly schedule so you can focus more time building relationships with referral partners and mentoring your team.
- Stop making decisions on pure emotion. Use practice metrics to improve operations and increase revenue.
The last suggestion is the most important. It is essential that you get an objective, detailed picture of your practice’s profitability—and track its growth going forward.
When it comes time to sell, you need not only to be profitable but be able to show, via financial reports, good financial health to prospective buyers.
What’s one thing intelligent business owners and savvy prospective buyers have in common? A love of consistency and predictability…the antidotes to risk.
Your ability to replicate results month-to-month and year-to-year is the measurement of sustainability. As Ben told us, “steady growth, year after year, is the ideal.”
By its very definition, sustainability is not something you can whip up overnight. It is a reflection of processes and results your business generates over time. Processes that include an ability to:
- Attract and retain patients
- Consistently create referrals via many different referral sources
- Maximize collections and reimbursements
- Reduce cancellations and increase productivity
- Establish your practice as the “go-to” clinic in your community
- Develop a team that’s packed with expertise, highly motivated, and dedicated to the mission of your practice
These processes enable your practice to scale up and grow in a way that’s sustainable over time. The consistency and predictability that comes with this lowers risk and increases profitability for as long as you own your practice. And it makes your practice tremendously more valuable when it comes time to sell.
If you’re unable to reproduce your practices results, without you there day in and day out, your business will be worth a whole lot less in the eyes of prospective buyers.
The buyer will have to pay you to stay on board to manage the operations and the staff. The money they pay you will be deducted from your share of the purchase price. There’s also potentially more risk because the unwavering drive you once had as an owner may start to waver, since you are now an employee of the new company.
Answer these 5 questions to determine how risky your practice is to sell right now:
- Is the amount of your patient care less than 10 hours per week? How long could you be absent from the office before the financial numbers would change?
- Are jobs and responsibilities clearly defined in an operation manual so everyone knows not only what to do, but when, how, and why to do it?
- Do you have a management team in place?
- If you did not treat patients, would your patients continue to get the same high level of care?
- Would referral sources continue to happily refer?
It takes time and know-how build a business that’s process-dependent, not person-dependent. A business built on processes offers the most value for the buyer, and the highest dollar for you!
Your physical therapy practice is your life’s work. It’s how you live out your passion for helping people and giving back to your community. It’s also the financial engine that supports your family. You deserve to capture the greatest possible return for all your hard work, sacrifice, and risk. To do that, you need to be preparing for that someday sale, today.
Are you a practice owner ready to build a business that’s profitable, sustainable, and transferable, AND want the know-how and support to do it?
Simply set up a no-obligation appointment to speak with me. During your free 45-minute call, we’ll discuss what you want, what’s preventing you from getting it, and the solution to overcome those challenges. Limited times are available.