Five Reasons Practices Hire Third-Party Advisors to Assist in Their Sale or Exit
Once the decision to sell a physician practice is made, the owner or group leader faces yet another important choice. The looming question becomes, “Are my interests best served by making and closing a deal on my own, or should I hire someone to help me?”
Even in cases where a buyer has already been identified and the offer may be in hand, many have benefited greatly by engaging professional assistance. The five factors below explain why this option can often serve an owner’s best interests.
- Managing emotions and maintaining a constructive element of objectivity.
The actual process of monetizing one’s life work and greatest asset is fraught with emotion. Having an objective resource to provide sound advice on valuation, salient transaction points, and critical elements of negotiation reduces the risk of emotions and feelings complicating the process and tends to improve the probability of reaching an optimal outcome.
- Delegating critical tasks to those who have the requisite expertise to execute them successfully.
Most leaders of independent practices are mature, highly experienced, and exceptionally qualified professionals. Competencies, however, are most likely concentrated in clinical disciplines, not in negotiating and executing the fine details of an important transaction. Leaving such roles to experienced and qualified advisors, negotiators, and executors reduces chance of missteps and miscommunication.
- Maintaining focus on things that matter – efficient and effective clinical execution.
When approaching a transaction, sellers should always remember what drives value. This is most often strong business results and potential that come from volume and quality of clinical activity. Executing a transaction takes time. It is, essentially, a job. By engaging professionals to “do the heavy lifting” in the transaction arena, the clinician may avoid distraction and maintain clear focus on practice performance.
- Maximizing relationship capital and avoiding complications and conflicts.
A core objective in most transactions is making sure that relationships with both the acquiror and financial partners of the seller are sound and well intact after closing. Issues of past performance, valuation, equity, and post close compensation and expectations all represent potential areas of conflict internally and with a buyer. Having a sounding board to vet issues and opportunities and a proxy to deliver critical messages can help preserve productive personal and working relationships.
- Ensuring that highest and best valuations are realized.
Simply stated, economic results tend to be better when a transaction professional is engaged to support negotiation and execution.
Selling a practice is likely the most complicated – and most important – business transaction a clinician will be involved in during his or her lifetime. There is only one opportunity to do it right. Although there are many, the considerations above are often cited by our clients as reasons they’ve looked to take advantage of experienced professional resources when facing the greatest financial opportunity of their professional careers. Whether you’re presently contemplating offers, or if you are simply beginning to think about what an exit might look like, an investment of time in speaking with an experienced transaction advisor is a worthwhile one that may result in significant return.
Jerry L. Kelsheimer is President of Medic Management Group and MMG Healthcare Solutions. His background includes extensive work in areas including leadership development, strategic planning, process improvement, capital markets, financial management, and mergers and acquisitions. MMG is a national provider of advisory and consulting competencies, transaction support services, and back office administrative support to independent and system owned physician practice groups.