When you are contemplating the potential sale of your practice, there is a lot to consider and a lot to do. We have come across many situations that have led to really poor outcomes for practitioners. Listed are what we consider to be the five most expensive mistakes you can easily avoid with a little planning and preparing.
Mistake 1. No plan to maximize value.
Without preparation, it is highly likely that any prospective offers will only be at the lower end of the scale. You do not know when an opportunity may walk in the door. Be prepared! Spending the time to analyse you practice and focus on those areas that drive value and those areas that detract value will pay handsomely if done well.
Mistake 2. Ignoring ugly financial warts.
Having unprepared financials can be a real problem – excessive cash lockup, poor debtors management, slow processing of work in progress, unrecognised liabilities such as long service leave, declining revenues due to the loss of key clients, etc. These issues will present ‘red flags’ to potential buyers and should be appropriately managed well before sale.
Mistake 3. Lack of preparation time.
If you’ve worked for 20-30 years building your business, you’re not going to ‘action’ over a weekend, all items to prepare your practice for sale. Most likely, there is much to be done. The best prepared usually secure the best deals. You can do a lot in 6-12 months, but most practices will benefit from a preparation period of two to three years to help them maximise their sale value.
Mistake 4. Head in the clouds.
Don’t delude yourself by expecting an outlandish price. Check the market and know what it is really worth – ‘the market’ is rarely wrong. We would recommend you have a valuation prepared by an independent valuer. Protect yourself by ensuring you have multiple parties interested in purchasing your practice.
Mistake 5. Managing your own negotiation.
You don’t get what you deserve in life, you get what you negotiate. It never ceases to amaze us when we learn of practitioners running their own sale/negotiation process. The long list of expensive mistakes continues to be recycled. Seek quality external advice for the sale of your practice.
More information: Sale Ready Program
Author: ATL Network