If the thought of retirement is sitting at the back of your mind, you are not alone. With the ageing of Baby Boomers, the percentage of Australians set to retire in the next three years is on a dramatic increase and this will continue until approximately 2034. We can assume then that there will be an increasing number of medical and dental practices being offered for sale.
To ensure your practice is attractive to buyers and you maximise your financial returns from this opportunity you need to ensure that the business side of your medical or dental practice is cared for and professionally managed.
Managing the sale process is vital to extracting value from the business.
The ideal time to start planning your exit strategy is approximately four to five years before you want to retire. This is based on the following:
- Having at least two years (ideally three) of financial results showing strong trading;
- Allowing one year to market the practice and find an appropriate buyer; and
- Allowing one year working in the practice after the sale to transition patients.
While the time frames on the above three factors may vary slightly, one constant factor for all sales is that the potential purchaser will be considering their return on investment against the risks of ownership.
How to get started
Commencing the process of preparing your practice for sale should be undertaken in a systematic way. Some ideas for getting started include:
- Review the current trading results of your business by benchmarking the financial performance of your practice against other medical or dental centres. This process can help to identify areas of weaker financial performance and changes may be undertaken to address these issues;
- Developing a budget for the business over the next financial year with the intention of renewing this for the second year;
- Have quarterly reviews of the financial performance of the business;
- Implement a marketing plan for the business;
- Review existing agreements with dentists and formalising these agreements.
The William Buck Succession and Transition Program
The William Buck Succession and Transition Program, provides business owners, current and future, an effective method of transitioning business ownership.
The Program focuses on achieving three key outcomes:
- To provide the exiting owners an effective sell down of equity taking into account timing, price and lifestyle considerations;
- To provide new owners the opportunity to buy in to the business on a structured basis that minimises their risks and maximises their opportunities; and
- Ensuring that the business transitions to its next phase in a seamless fashion.
Whatever your goals, if you are yet to run your practice through a benchmarking and valuation exercise, you are missing a vital opportunity to increase its value.