This is one of the most common questions we get as Brokers. The answer has a lot of variables,
but is important for Doctors to plan for their exit from practice and their life after they sell. The
variables are, location, number of Doctors, size of hospital, and strength of cash flow/price. We
will try to look at each of these variables one at a time, but realize that they are interrelated
and co-dependent on the overall marketing and sale of your practice.
Practices can sell well in any part of the Country, but we do see more demand in Southern
coastal areas and larger cities. Practices in these areas will typically have buyers looking at them
in the 1st 60 to 90 days on the market. Practices in rural areas are not as desirable and will take
longer to find a buyer, more typically 10 to 12 months or more. When you start looking more
specifically at areas within a city, then clean, safe, high-visibility, ease of ingress/egress and
parking are all features that will help the practice sell sooner than later.
Number of Doctors
It is no secret that the demand for Veterinary services is at an all time high and that the
supply of Veterinary Associates is a challenge. That has created a market that makes it very
difficult to sell a single Doctor practice. Veterinarians that are in the market to buy now are
looking for 1.5 to 2 Doctor practices so they are not relying on their efforts alone to meet the
needs of the clients and patients. Corporate groups will rarely look at anything less than a 2
Doctor practice and most of them prefer 3 or more Doctors. So if you are a solo Doctor owner,
then you can expect it to take as long as a year or more to find a buyer. So, you need to enter
the market with that expectation. If you are a 2+ Doctor Practice and all of the other variables
are favorable, then you have a good chance of finding a buyer in the 1st 90 days on the market.
Size of Hospital
The size of the hospital and number of exam rooms will affect your time on the market. Buyers want to see that they can have space to grow the practice and work efficiently without staff members being crowded as they work. So, if you are in a 1,000 sq. ft lease space with 1 exam room, then it will take longer to find a buyer than if you are in 2,500 to 3,000 sq. ft with 3 exam rooms. If you are in a small space and have some time before you need to sell then you might want to consider if there are options for getting into a larger space 2-3 years prior to selling.
The strength of the cash flow of the practice will be one of the primary attractors of buyers of the variables discussed. If the cash flow is strong and the asking price provides a solid after debt income to the buyer, then there should be enough interested buyers to receive an offer in the first 90 days on the market, given there are no major issues with any of the other items mentioned above. If the cash flow is weak and provides a marginal after debt income, the practice could be on the market for a while and interested buyers may have trouble securing financing.
In general, the timing to closing once an offer has been received and accepted is 90 to 120 days. This will include time for the buyer to do their due diligence and secure financing (or private equity approval for Corporate groups). This also allows for proper appraisals, and inspections of Real Estate, if necessary and review and approval of all legal documents for closing. There is no doubt that there is a lot of information to decipher as a practice owner considers when the time is right to pursue selling their practice. The Brokers at Total Practice Solutions Group have the Experience, Knowledge and Expertise to assess all of these variables and more to guide you to a quality decision as you consider selling your practice.