By Luis de la Prida, MBA, CM&AA
You’ve got options.
Before you get to the table, get as many offers as possible. This encourages competition among buyers. And whoever wants to buy your practice—make sure they’ve purchased at least one other similar practice before. You want to work with someone who is well-versed in the process.
Understand the Person Across the Table
Once you start the negotiating process, the buyer knows the ins-and-outs of your practice. But do you know exactly what the buyer is all about? What motivates them? What’s driving their decision to express interest in purchasing your practice? If you understand what influences the buyer, you’ll have more power at the table.
Price Matters, But…
Sellers tend to get hung up on the initial price offered and don’t understand that the terms are just as important and the price can be reduced during the due diligence process.
Another mistake is that the seller is not often flexible—they cling to a one-sided position that only benefits them. In others words, they want top dollar for the practice—all cash. They aren’t willing to entertain the offer of an earnout. In a good negotiation, the benefit should accrue to both the buyer and the seller.
Understand the Terms
Before you sign on the dotted line, you should feel comfortable with the M&A lingo, such as closing conditions, purchase considerations, and purchase price adjustments. Feeling a little lost? Check out Part 5 of this blog, which explains the typical terms in an agreement.
Not Happy with the Offer? Keep Looking
Just because you got an offer, you don’t have to accept it. Before you get to the table, it’s important to know your “walk-away” number. Once you know this number, you’ll be able to avoid deals that make you feel uncomfortable.
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 PTPEditor@medqor.com.
Read more in our series about how to sell your physical therapy clinic.