By Luis de la Prida, MBA, CM&AA As a COO of a multi-specialty medical group, my job was to approach owners of physical therapy centers and ask them if they were open to selling their practice to us. So many were not prepared for that conversation. One could argue that the question is not whether you will one day need outpatient rehab therapy, but rather when you will need therapy. The same could be said of the business. It is not whether you will one day sell your practice; it is a question of when you will sell it. Solid preparation allows you to work on the practice instead of in the practice. It also forces owners to think about what they want to accomplish and gives them time to improve the practice to present the practice in the most favorable way. I’ve seen many examples of physical therapists who have closed their practice because they couldn’t sell it—and often, it made more sense for them to close it and work for someone else. I’ve also seen therapists who are so tired that they cut back to part-time and then tried to sell their practice. If they had properly prepared, they would have done the opposite—they would have increased their hours, boosted profitability, and then put the practice on the market. Selling a practice is a multi-step process that begins by preparing yourself for a sale—both mentally and operationally. Here’s how to do it: Schedule a Checkup Before you think about putting up the “For Sale” sign (metaphorically speaking), know exactly why you are selling. Are you looking to retire? Are you seeking a partner to either help you grow or manage your practice? This is the time to re-familiarize yourself with the vital signs of your practice. When you know exactly what you’re selling—you’ll know exactly what you’re worth. Gather Up Your Papers Understand your financial, legal, and operational systems. Year-to-date financial statements, tax returns, detailed billing, collections, and payroll reports are a good place to start. You don’t need detailed knowledge of all your documents. You just need to know they exist and have a good idea of what’s in them. Know Your Equipment Consider completing a formal valuation of your center. If that is not in your budget, your M&A advisor may be able to prepare a less formal broker opinion of value. Knowing the ranges of values that apply to your practice is one of the first steps in deciding how to proceed. And remember one other key component of practice value: your equipment, including treatment tables, stationary bikes, and other clinical items, and furniture, computers, and medical inventory, if applicable. Don’t Fly Solo Patients rely on your expertise for a successful recovery. You should assemble a team of specialists to help you successfully exit your practice. Transition team members often include a mergers and acquisitions advisor, accountant, an attorney, financial advisors, and healthcare M&A professionals. Find the right people to help you make the right decisions. Marketing Matters When you’re selling—show off. Create a detailed marketing plan that highlights your exceptional practice. Don’t forget, during M&A discussions—always keep your patients and employees as a top priority. Luis de la Prida, MBA, CM&AA, is a partner at New York Business Brokerage Inc, an M+A advisory firm that specializes in small to mid-market companies. For more information, contact [email protected].