Had Enough? Sell and Leave it All Behind
Part 2 mentioned there are three ways to exit your Optometry practice: 1) sell and leave, 2) sell and stay, and 3) partial sale. In 2009 I sold and left! Here’s a brief outline of how it is done.
Step by Step – How to Walk Away
Decide you are ready to sell – both emotionally and financially. Be honest with yourself and make sure you are comfortable giving up your life’s work. What will you do? Playing golf is great, but most of us need something more challenging to keep us motivated. And most importantly, do you have enough retirement money, or will you need to keep working to provide income?
- Hire a broker. A good broker is invaluable; he not only helps find a buyer, but can show your practice so you can spend time seeing patients and keeping sales up. The broker is good at separating “real buyers” from “tire kickers”, and finding qualified buyers. Your time is better spent running your business.
- Advertise. Local buyers purchase most practices. Your broker will advertise nationally on their website and journals, but you should put your practice in the classifieds of your optometry state newsletter. Keep everything confidential as long as possible, even from your staff. At a certain point, though, you will need to tell them your intentions – that is only fair to them.
- Letter of Intent. Similar to the “offer to purchase” when buying a house, a new buyer should sign a letter of intent. It is a brief document outlining the basics of the sale such as owner vs. bank financing, purchase price, etc. It is essentially a sign of good faith, and includes a deposit that is held in escrow. The escrow should be large enough to show the buyer is committed.
- Agreement to Purchase Assets. This is the legal agreement that is drawn up by your lawyer. It is very thorough and covers all the contingencies, including what is included in the sale, what things are transferred (ie utility, phone, computer services, etc) and what is not. In most sales, the seller pays off all the equipment notes prior to the sale. The buyer writes one check which pays for all the equipment, inventory, and goodwill (including charts) of the practice.
- Transition. Traditional thinking suggests that having the seller remain with the office for six months to a year enables a smoother transition, allowing the patients to gradually accept the new owner. Another recommendation has always been to send out an announcement of the change. Personally, I don’t think either of these things are important or necessary. Often, the old owner just gets in the way, and is an impediment to the changes the new owner wants to bring.
Not quite ready to walk away completely? Stay tuned….next we cover “sell and stay”!