Getting a practice ready to sell requires getting the current owner ready while getting the practice ready. Both the owner and the practice need to go through a process to be ready. It certainly does not happen by chance. But the benefits are apparent.
Table of contents
Let’s begin by looking at why owners sell their practices.
Why sell a mental health practice
Let’s begin by examining this truth: In the end, all practices are sold to another, or they close when the owner retires. Obvious, right? And yet many practice owners are so busy with daily operations that they don’t pause to think about the end game much. However, we should focus on what comes next if for no other reason than to assure that we will hit our target–to sell the asset we have developed.
What determines whether a practice is sold or closed?
All owners would prefer selling their practice over closing it. But to sell, there has to be a buyer. And to attract a buyer, the practice must become an entity that can stand on its own feet apart from the current owner’s efforts. To build that sort of asset takes time, skill, and planning.
In the early days, it is not conceivable for the practice to stand apart from the owner. But later on, this is a crucial feature for creating value. For more on these issues, see:
- Selling a practice: How they become assets and how to maximize their value
- How to estimate the value of a mental health business
In short, if the practice remains dependent on the owner, is a failure to get a practice ready to sell. Those practices that remain dependent on the owner will close when the owner retires or ceases practice. In other words, those practices that are not ready to sell do not have enough value to attract a buyer. The owner may find someone willing to pay for the phone number, but otherwise, the doors will close.
Deciding when it is time to sell
There may be several reasons for deciding that now is the time to sell. Let’s consider some of the more common motivations.
1. Retirement
Most of us do not want to work until we drop. If our practice becomes valuable enough, its sale can help achieve part of the financial goals that enable retirement. This outcome achieves several desirable consequences:
- The owner gets to retire
- Practice continues to provide the services it has
- Employees continue to have a place of employment
- Purchasers gain new experiences in leading the organization
Yes, retirement is one of the more apparent reasons for a sale and one of the best outcomes.
2. Not enjoying being an owner
There are times when the weight of being the owner is a heavy burden. And for some owners, they come to hate the role and responsibility. I have written quite a bit on these topics:
- How to overcome employee betrayal: 5 steps to love resiliently
- How to make sense of soured workplace relationships: Attachment injuries
- Addition by subtraction: Types of difficult, disastrous employees
- When we need to fire an employee
- How to overcome crises–When several clinicians leave
- Reducing in-the-trench psychotherapy to focus on practice management
- Using staff complaints to make your organization great
- Why effective leadership is lonely and exhausting
From reading through the above titles, you can see some of the owners’ challenges. Several of these put together may be enough to make one look for an exit.
3. The practice needs more energy, money, or a different skill set than the current owner possesses
As practices mature, they become a thing unto themselves. And they need proper nourishment to grow appropriately. Whether in time, energy, skill, or money, a practice’s demands can stretch an owner to the limit. Therefore, a wise owner will find the needed resources to keep the practice growing. One way to obtain what is needed may be to get the practice ready to sell. That could mean selling only part of the practice or the whole thing.
4. Owners desire to move to the next challenge
One last reason to sell is that the current owner desires to do something else or move to a new area. Not everyone wants to stay tied to a practice for the rest of one’s career. And, of course, the owner has options. Selling the practice is one.
Getting you ready to sell: Are you ready to let go?
Selling a practice is both a financial and emotional process. In other posts, I go into the many economic facets of making a deal happen, but in my experience, the emotional aspects can sneak upon us. Getting the owner ready to sell is often neglected in the process.
In my case, I returned to psychotherapy in preparation for the transitions. And even with that preparation to sell the practice, it was still challenging.
For example, to sell means transitioning from having many conversations and decisions about the practice each week to nearly none. Furthermore, in my case, the sale meant going from having 50 people who cared about my work decisions to zero.
Furthermore, my schedule went from jam-packed appointments to only one or two a day. And in truth, some of those things in my retirement calendar were not urgent or even necessary. It took months to years to get used to a day with nothing on the schedule. These days, I love an unscheduled day. We always find good things to fill a day.
Of course, I knew that these transitions were going to happen. And indeed, that is what I wanted. But that does not negate the inevitable disorientation that comes with such changes. In short, getting the owner ready to sell is well worth the effort.
Getting a practice ready to sell: Is your practice ready for a transition of leadership?
Determining your practice’s readiness for a change in leadership is also not easy to figure out. While everyone in the organization may know that the practice will change, not everyone in the organization is eager to make that journey. And while we cannot base our decisions about selling on what pleases others, properly informing everyone of what is coming may help them find the silver lining.
How much lead-time is needed?
Sometimes people wonder about how much lead-time is optimal. I believe the answer varies based on many factors. For example, in my case, I let key people know of my time frame about eight years before the actual retirement. Then when we started moving personnel around in preparation for the transitions, we had to let the rest of the staff know. And then, as the negotiations concluded with an agreement, we announced the closing date to all the staff. That was about two months ahead of closing.
In summing up, I wanted to limit the room for speculation as much as possible. Some advisors thought that was way too long a timeframe. But while it may be a bit excessive, therapists are intuitive. And they can sense when something is up.
In conclusion
Planning and thinking through the sale of the practice may be as crucial to the organization’s health as any management decision. Indeed, the health of the next chapter stands on the shoulders of the owner’s plans for selling a mental health practice.