Making small changes can differentiate your practice from others for sale.
When my clients and I review their exit strategy we discuss the importance of investing into their practice in order to get the best price possible. There are many variables used to determine a “value” of a practice, and often one important variable for best results is missed – Buyer Appeal.
Selling a business is more complex than an ordinary real estate transaction. The majority of a healthcare practice’s value, for instance, likely lies in its patient base more than the physical location and equipment. But that doesn’t mean you should ignore the physical aspects of your practice as you consider putting it up for sale. In many cases, small investments in improvements can make it more attractive to buyers and stand out from the competition.
First, take a tour of your offices as though you were a potential buyer. Better yet, ask a friend to play the part, so they can give everything an unbiased eye. Does the exterior look fresh and inviting? Is signage clear and up-to-date? Check for wear, such as scuff marks on walls, worn upholstery and faded carpets. Consider cleaning, repairing, replacing and painting as needed. Bear in mind that many buyers may have their own decorating ideas, so they may want to replace even the newest decor. The goal is to convey the impression of a practice that is modern, busy and well maintained. Small details, such as fresh flowers and recent reading material, can also contribute to that impression. Remember, too, that an interested buyer will be peeking into every corner of your space, so you and your staff should make a concerted effort to keep bookshelves, closets, cabinets and back offices clean, tidy and well organized.
When it comes to upgrading your equipment, keep a careful eye on costs. Some upgrades—particularly those that replace outmoded technologies with current ones—may be more cost-effective than those that are merely aesthetic. Before you make any major investment in improvements, consider preparing a cost-benefit analysis. There are several aspects of such a calculation, but the primary considerations are time horizon, cost and potential return, including savings. Take the example of purchasing an updated piece of equipment, such as replacing film radiography equipment with a modern digital system. Does the cost of the equipment, minus savings in taxes (due to the capital expense), supplies and labor, if any, yield a profitable increase in your practice’s sale price? If not, a lower asking price might turn out to be the more profitable avenue to attract buyers.
The sooner you start planning for a sale, the greater the chance you have for improving not just the ability of your practice to attract buyers, but also the final price you are able to negotiate. A fresh, pleasing office space can go a long way to spurring prospective buyers into action.
If you need help with making a decision that is financially impactful to your practice…. just ask me for assistance!
By Jeff Holt, CMPE, VP, Senior Healthcare Business Banker with PNC Bank
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Jeff Holt is a Senior Healthcare Business Banker and V.P. with PNC Bank’s Healthcare Business Banking and is a Certified Medical Practice Executive. He can be reached at (352) 385-3800 or Jeffrey.Holt@pnc.com.