Blog
Blog
 
 
 
 
 
 
 
 
 
 
 
Blog
IDOC actively shares industry-focused articles, blog posts, podcasts, videos and other thought leadership with our members and other optometric practitioners. Below, you will find links to our growing library of educational materials and multi-media assets written and created by IDOC's team of seasoned industry experts.
Nathan Hayes | 8/7/2020
THREE QUESTIONS TO ASK BEFORE YOU SELL YOUR PRACTICE

“I’m thinking of selling my practice.”

“Should I sell my practice now while prices are at all-time highs? How long does the private equity phenomenon last?”

Practice owners often focus on market trends in the pricing of practices when deciding when and whether to sell. Let me suggest three questions that can frame a more holistic approach to deciding when and whether to sell.

Question 1: Is my practice ready to sell?

The value of any business is driven by two factors: the cash flow the practice generates today and the probability that a third party can expect those cash flows to be sustained or grown in the future. The more transferrable your practice is, the more valuable it is. The risk around transferability is what drives the multiple applied to a practice’s earnings.

If your practice can’t easily be transferred – if it completely depends on you for everything, if it’s patients aren’t loyal, if it isn’t currently providing sufficient cash flow to pay back a purchase loan and still pay a new owner a reasonable wage – it’s possible there won’t be any market for your practice, that you won’t find a buyer.

But remember this, the less your practice depends on you, the more valuable it will be. As it happens, the less your practice depends on you, the more profitable and enjoyable it will be for you to own, as well. What’s good for your practice at the time of sale is good for your practice today. This is why there’s a burden to continually grow and improve your practice.

Question 2: Am I financially ready?

A question very few owners investigate ahead of selling is: what do I actually need to have saved in order to retire? Do you know what your household spending is today? What will your budget be going into retirement? You owe it to yourself and your family to work with a financial planner to KNOW your needs for retirement.

Once you know your retirement spending, your financial advisor can help you set a savings target. For most practice owners, your practice is a major part of your retirement. Knowing your savings target helps you assess whether to sell and how you need to change your practice in order to hit your target.

When it comes to big offers from private equity, this can be one factor in deciding to ‘take the money and run’, but it may also mean you decide to hold onto your income-producing asset (the practice) longer so that you can continue to build your savings.

Question 3: Am I personally ready?

This is a question that most owners think they can answer, but I wonder how many have really thought it through. Most owners who are close to selling their practices have had OPTOMETRIST and OWNER as a core part of their identity for decades. How are you going to fill your days if you’re no longer seeing patients? If you work for your seller, how is it going to feel to see them change the practice?

If you’re thinking of selling young, make sure you have a clear plan of what comes next. As a friend of my once said when he was 68-years-young: “Look, I can only play so much golf. My wife only likes me so much. What else am I going to do but own this practice and continue to see patients two days per week.”

Selling your practice is a momentous decision. Use these three questions, which are the core framework of IDOC Navigation Services, to give process to your decision making. And do call and let us help you think through this and other key decisions you face as owners.

Nathan Hayes
Practice Finance Consultant
Nathan Hayes joined IDOC with a solid background in the eye care industry and serves as IDOC&rsquo;s Practice Finance Consultant. Before Prima launched in 2011, he spent five years in business development for Red Tray and HMI Buying Group. Nathan graduated from Vanderbilt University in three years, with a degree in Spanish and a minor in mathematics. <br/><br/>After graduating, he spent a year working abroad. During that time, he worked for two firms in San Jose, Costa Rica. He interned with Grupo Juridico de San Jose, working in environmental policy to protect a threatened parcel of land, then he worked as a project manager for a US-owned precision machining shop. Nathan then spent 6 months working with street children and orphans in Mexico. <br/><br/>Before getting into the healthcare industry, he was an Assistant Store Manager and completed the Corporate Training Program with Haverty&rsquo;s Furniture Company in Atlanta, GA. Nathan and his wife Heather have a son, Daniel, and a daughter, Hannah. In his spare time, Nathan enjoys reading and outdoors activities - especially cycling and hiking.
 LinkedIn
Trending Blogs
 
 

8/7/2020 | Author: Nathan Hayes

“I’m shockingly flush with cash. My checking account balance is fantastic.”

This isn’t what I expected to hear on the tail end of the most prolonged economic catastrophe of our lifetime. But many practices, after leaning out all their expenses during the... Read more


1/14/2020 | Author: Nathan Hayes

It’s a new year, which means new hopes, new opportunities, and new goals and plans to achieve your goals. Since the good goals lead to good planning, let’s think about why we set goals and how we achieve them.

Keep the Main Thing the Main... Read more


9/6/2019 | Author: Nathan Hayes

With Private Equity groups scooping up practices left and right (it seems that way at least), it stands to reason that most owners have at least thought about whether they would say yes to the right offer. I tell most owners that they should own their practices for as long as... Read more


6/10/2019 | Author: Nathan Hayes

All practices will hit a point where there just isn’t enough time and headspace for a single owner to see all the patients, manage the team, and run the business.  In order to grow, the owner has to delegate something.  The first thing most owners will do is hire or promote a manager... Read more


5/29/2019 | Author: Nathan Hayes

Cost of Goods is the highest expense category for many – if not most – independent practices.  And most owners feel like they’re spending too much or just don’t know – how does my Cost of Goods (COGS) compare to other practices?

I’ve heard practice management lecturers say that... Read more


4/24/2019 | Author: Nathan Hayes

From time to time, I’ll have a call that goes something like this: “Help!  My revenues are down, and I don’t know why!”

If this happens to you, it’s useful to remember that your collected gross revenue is a function of three variables, which we could express in a formula that... Read more


12/3/2018 | Author: Nathan Hayes

It’s that time of year – practices are evaluating what went right – and wrong – in 2018 and setting goals for 2019.  And with goals comes the age-old question: what should you do about a bonus plan next year?

First the theory of bonuses: people respond to incentives, and if you... Read more


12/3/2018 | Author: Nathan Hayes

Partnerships can be powerful drivers of growth, combining the energy, expertise and capital of multiple doctor owners to create a bigger practice than the sum of its owners individual abilities and contributions.

For all the benefits, partnerships come with their own sets of... Read more


9/5/2018 | Author: Nathan Hayes

Many practice owners will struggle for to grow their revenues and profits – and therefore their incomes – from a cold start.  Others may buy a healthy, existing practice or see fast growth.  Whatever the case, achieving even a modicum of success can bring its own set of questions and... Read more


8/13/2018 | Author: Nathan Hayes

If you’ve ever sweated making payroll or wondered how you could possibly scrounge up enough cash to pay your distributor bill on time or just found it hard to pay yourself, you know the... Read more

Contact Us
© 2020 IDOC. All Rights Reserved