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Buyers
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Get
started today by simply filling out a few forms. Click
here!
"What
we can do for you..."
Security
A
big advantage in buying an ongoing practice is that you, as
the new owner, have an immediate cash
flow and an established client/patient
base . You
do not have to build a practice; you simply take over an existing,
successful practice with the present owner’s assistance.
Financing
We assist you in obtaining financing.
Banks are approached to finance practice purchases,
and they scrutinize the transaction.
Most small practices attempt to minimize profits shown
on financial statements to reduce tax liability.
Also, a bank cannot come in to manage a practice if
foreclosure becomes necessary.
Confidentiality
Unlike the sale of real estate or franchises, the sale of an
ongoing practice is very confidential for both the seller and
the prospective buyer. All
inquiries are held in strict confidence.
Meetings are confidential, and we are available after
hours and on weekends.
" Things a buyer should know...."
We
at Equity Professional Practices are advocates of finding
a practice that you like and
feel comfortable owning.
You, like every other prospective buyer, have a vision
of independent professional practice and calling your own
shots. An old
saying in the real estate industry is … “The three most important
things a buyer should look for are cash flows, clients, &
location.” While
location is important to a practice
buyer, be aware that track record and
client base round out the three components of a successful
practice. Let
us assume that you find a practice that you like and its location
is fine, but the practice may not show the greatest record
of accomplishment. Purchased
for the right price and terms, this practice could become
more successful with proper management making it a good way
to achieve your vision of being in practice for yourself.
Finally, be aware that many practices sell for much
less than they are originally listed.
So, if it is a practices that you like, do not be afraid
to make what you consider to be a fair offer.
The
Process
The
process of buying a practice is as follows:
¨
Evaluate
the basic information on alternative practices that sound
interesting to you.
¨
Visit
the practice (if possible) to get a “feel”
for the practice.
¨
Meet
with the seller, asking from general to probing questions
on anything and everything, except
actual asking price.
¨
Do
your preliminary evaluation, based on the information forwarded
from the seller to Equity Professional Practices Inc.
and onyou.
¨
Make
an offer, assuming that all of the information you have been
provided is correct, but include
contingencies, which allow you to confirm such information.
Equity Professional Practices Inc. will assist you
with writing an offer to protect you as the buyer.
¨
Once
a sales price is agreed upon, make a closer investigation of
the practice, confirming to your
satisfaction the validity of information provided by
the seller.
¨
Have
documents prepared for the closing.
You may agree with the seller to share the cost of a
closing
attorney. This
lawyer will not argue the position for either party, but
drafts all necessary legal
documents to comply with the agreement a buyer and seller have
reached.
¨
Close
the purchase, and begin your first day as the owner of your
own practice. The
seller will
assist in an orderly transition if that is agreed upon
in advance by the parties.
¨
You
are part of the American Dream – You
and your family own your own practice!
Top 10
Tips for Buying the Right Practice Right
- Buy
a practice you like.
Although profitability is important, you will risk
making a terrible mistake if you do not buy a practice that you like. Often,
people who buy hastily without considering personal
satisfaction later sell their practices at a loss.
Will you be proud to own the practice?
If you are not sure, do not buy that type of
practice.
- Be
flexible. Equity
Professional Practices Inc. advises its clients to be open to all sorts
of practices. Do not lock your self into a McDonald’s or a Mailboxes,
etc. Who
knows, you may surprise yourself by taking a liking t a
Blimpie or Signs Now franchise. If you lock into only one type of practices, it will take you
much longer to find a practice to buy.
Examine the following categories: retail; service;
manufacturing; distribution; restaurant; lounge;
coin-operated practice.
First, decide if there are any categories that you
do not want to be in, then focus on the remaining
categories.
- Do
not expect much financial information.
Do not expect “traditional” financial
information from the owner of a privately owned practice.
The only accounting required of a privately owned
practice is filing tax returns, which are prepared to
report the lowest possible tax liability.
There are other ways to verify cash flow later.
- Consider
chemistry. This
may seem like an unusual recommendation, but Equity Professional Practices
Inc. tells its clients to forget about buying a practice if they do not like the current owner.
The buying process is a long and somewhat
complicated one -- it is imperative that the buyer and
seller work through it together.
- Go
with owner financing.
The owner of the practice should finance the
purchase. In
most cases, this is the sole source of financing available
to buyers of an existing practice.
With owner financing, you can feel secure in
believing the owner’s representations as to income and
expenses, and you have a remedy if there are any problems
after closing. It
also gives you a “silent partner” with a personal
stake in you success.
- Do
not pay cash. You
may not want a loan over your head, but do not pay all
cash for a practice – even if you have it.
You should keep a stash on hand for emergencies and
practice improvements.
If you insist on paying all cash, at least place
some of the purchase price in escrow for a period of time
to protect yourself from any problems that may surface
after the closing.
- Make
an offer before you have seen all of the financial and
other practice records of the practice.
It is simply not possible to know everything about
a practice before you make the initial offer.
The offer does not commit you to the practice, but
it does let the seller know you are serious.
- Stay
calm. Buying
a practice can be like dating.
You’ve got so many emotions going –
do you like the practice, does the owner like you, is this
feasible, what does my family think, etc. – that
you’re bound to get a little flustered.
Keep your wits about you; you will need them. Remain calm, and negotiate your offer with quite reflection
and reasoned discussions.
As you go through negotiations, always use this
simple formula: Cash Flow Available minus Annual Payments
to Owner = $$$ for you and your family. If at any time during the negotiations this formula does not
result in enough money for you and your family, stop.
- Investigate
the practice. Once
the owner has accepted your offer, the real work begins.
Verify cash flow and identify any hidden problems.
If you see red flags in either of these areas,
change or terminate your offer.
There should be stipulations in your offer that
allow for this.
- Close
quickly. Once
the deal is made, try to close as quickly as possible.
You do not want owner to have second thoughts or
news of the sale to leak out to employees, suppliers and
clients.
THE
90% RULE: FACTS ABOUT BUYERS
- 90%
of all buyers are first-time buyers.
In other words, they have never been in practice before.
- 90%
of all buyers will finance the purchase of their practice.
- 90%
of all buyers do not know what kind of practice they want
or best serves their needs.
- 90%
of all buyers are terrified and/or uneducated in the
practice buying process.
- 90%
of all sales will be financed by the seller.
- 90%
(or more) will not buy the practice that was advertised or
the one that they called in on.
Advantages of Buying an Existing Practice
-
Actual
results rather than pro-forma.
-
Immediate
cash flow.
-
Trained
employees in place.
-
Established
suppliers and credit.
-
Established
customers and referral practice.
-
Existing
licenses and permits.
-
Training
by the seller.
-
The
availability of owner financing.
Note:
Remember ultimately the success or failure of the
practice is the owner’s responsibility,
and there is no “Right” practice, so buyers must be
flexible.
Interested
in a practice we have listed on our website?
Get started today by simply filling out a few forms. Click
here!
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