Is Your Medical Practice Ready for Acquisition?
A medical practitioner who has built a private practice often starts with a vision of being able to deliver care their own way, but also with the view to being able to retire or phase down their career on their own terms down the road. When they start to see that it is time to hand off to their practice to a buyer or investor group, however, they may come face to face with a hard reality: a potential purchaser is likely to be examining the value of the practice through a lens that feels unfamiliar to the doctor who nurtured their business from the ground up.
Succession Planning
Whether the doctor contemplating a sale is transitioning straight into retirement or is contemplating a period of work when they are not also managing a practice at the same time, they’re going to want to get the best possible acquisition price. But buyers do not pay a premium for “potential.” They will be looking at quantifiable metrics that express how the practice is and has been performing. If the practice is not currently living up to its promise, the offers received are likely to be disappointing, if not insufficient to support the seller’s financial goals.
Preparing for a Merger Or Acquisition
To avoid this scenario, a doctor trying to position their practice for acquisition should first familiarize themselves with the type of metrics investors or buyers look at and examine what those metrics are currently saying about the value of their practice. If the results are not encouraging, the time to act is before soliciting offers—through identifying and focusing on an effective profit and marketing strategy that will unlock that latent potential.
What Quantitative Metrics May Be Used to Evaluate Your Practice?
Much of the reward a medical professional derives from running a practice is not based on numbers, but on the satisfaction of being able to make a difference in their patients’ lives. An outside investor or buyer will be taking a more dispassionate look, probably with the assistance of an independent business valuation expert, that is based on numbers. They’re likely to consider both data from your practice and from comparable sales of similar practices to plug into standard valuation formulas and approaches, but there can be variations that affect the figures they arrive at. Some questions to consider:
| What to consider when preparing for an acquisition | Acquisition Tips for Private Medical Practices |
| Revenue | If they’re using revenue, is it topline revenue, revenue after reimbursement, or revenue after deductions? |
| Comparable Sales | How are comps narrowed down by geography limitation, recency of sales, revenue size, and/or intra-specialty definition? |
| Earnings Before Interest, Taxes, and Amortization (EBITA)/Profitability | Is EBITA recast or adjusted? Who decides what expenses are applicable or removed in making this calculation? |
| Timeline Assumptions | Are these made using only the previous year’s EBITA or revenue, or the previous five years? How are forecast revenue or growth rate factored in? Have atypical events been normalized? |
Positioning Your Practice for a Successful Sale
If the numbers aren’t yet telling the story you want a potential buyer to see, the answer is not to resign yourself to adjusting your expectations downward. It is possible to change those metrics with an integrated sales and marketing approach that identifies your ideal profit strategy and works through state-of-the-art digital marketing to bring in the right kind of clients to grow your practice.
At My Healthcare Marketing, we employ our proprietary SEO2Sales™ process to take a fresh look at your practice and align your sales and marketing efforts. We don’t start with assumptions about the best way to boost profits and growth—we dig into the numbers to see what’s really going on and use what those facts reveal to create a winning strategy. How does this work?
Case Study: A Podiatrist Grows Steadily in Patient Count
One client, a podiatrist, had been struggling to grow her practice. She thought the way forward meant bringing in more surgical patients, but that wasn’t having the effect she’d hoped for. When we came in, our analysis uncovered a surprise that upended that belief. In fact, her ideal profit strategy was to attract patients suffering from ingrown toenails. Treatment for this common issue seemed so humble and unremarkable that it had flown under the radar as a possible avenue for growth. But once we realigned and optimized her digital marketing efforts to target this issue, her practice took off!
Are you ready for an acquisition?
In addition to turning up surprises like these, our method is ideal for practices that have had inconsistent or disappointing results from their previous online marketing efforts. We can help you maximize the impact of your marketing budget by ensuring that your branding and messaging are focused on achieving well-defined, tangible results. Sectors we successfully work with include podiatry, dermatology/medspas, urgent care, interventional radiology, chiropractic care, and more.
The Unique Process in SEO2Sales That Is Growing Medical Practices
If you’re looking ahead to the sale of your practice and want to take proactive steps to increase your odds of getting a favorable offer, My Healthcare Marketing a division of Iffel International can help. Contact us here today to schedule your consultation.
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