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Empowering Women in Chiroprractic - You Have A Buyer for Your Practice!

about lcw chirosecure practice growth May 04, 2024

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Disclaimer: The following is an actual transcript. We do our best to make sure the transcript is as accurate as possible, however, it may contain spelling or grammatical errors.  We suggest you watch the video while reading the transcript.

Welcome everyone. I am Dr. Randi Ross, CEO of Premier Practice Consultants. And first I want to take a minute to thank ChiroSecure for hosting this event and allowing me to be here to share some really important information with you. So we're going to talk about on this class, congratulations, you found a buyer for your practice, but do you know what is so important, what's actually critical so you don't lose that sale?

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That's what we're going to go through here right now. So one of the most important things and probably the most common thing that I see that happens with people is they take their foot off the gas. So what happens is you have a buyer the sale price, the terms are all agreed to. Now we're just waiting for all the contracts and the banking and everybody just takes a sigh of relief.

And they feel like they don't have to continue to work as hard as they were leading up to. the sale of the practice being in place. I'm here to tell you that is a huge mistake. First of all, most people think that an acquisition, once a sale price is agreed to, it's only going to take a couple of months, that's what the banks all lie to everyone about.

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And yeah, other deals that only take two, three months. Yes. But I'm going to tell you that's actually very rare. The norm these days are 3, 4, 5, 6, sometimes even 8, 9 or 10 months. Now those are the exceptions. The ones that take longer. But it does happen from time to time. And the worst thing that happens is you get complacent.

You get a little lazy. You start to figure, Hey, not my problem anymore. Going to pass this on to someone else. And unfortunately it takes a little longer than you think. And now the practice starts to drop off and bankers as well as buyers will continue to ask for financials and So it's important that we don't show any kind of dip or drop off.

And sometimes what happens is a deal falls apart. So now if we've spent four or five, six months trying to bring an in acquisition to completion, and it happens to fall apart and you let your foot off the gas, and now the practice has dropped off somewhat. Now you really got to pump yourself back up to get back in there, get those numbers back up.

Otherwise, when we find a new buyer, it's not going to have the same reflection of your practice because you let it drop off for four or five or six months. So you have to act as if you are still the owner, and you are still the owner. So there's nothing wrong with continuing to keep your foot on the gas, continue to grow the practice.

You're making the money. It's your revenue. It's not like you're working for nothing. And I will tell you, this is probably the biggest mistake that we always see. And banks are very suspect of it. Buyers are very suspect of it and it just puts you in sometimes a very awkward situation. Sometimes we have to actually readjust the sale price because someone has let the practice drop 10, 15, 20 percent and you all know it can happen really quickly.

So it's not like it's gonna, a week is gonna go by that you're not pushing it and these things are gonna happen, but when a couple of months goes by it can happen. It's also bad for the staff that you know, they're losing that momentum that you've created within the practice. So please act as if the sale is not complete.

You don't know if it will be complete, so you're going to keep your head in the game. One of the other things that's really important once you have a buyer and we're in that acquisition process is to continue to track your stats. Sometimes again, this goes back to people get a little lazy, they get a little, complacent.

They don't feel like they have to anymore. Buyers, not so much banks, but buyers will continue to ask for stats. They don't want to see a practice that gets, 30, 35 new patients a month. All of a sudden, when they've made an offer and we're working through the process, now you're getting 10, 15 new patients a month.

That's a big revenue drop. That's a big new patient drop. for a buyer to sit with. And sometimes, it just makes them skittish and they'll even walk away when these things happen. So keep track of all your staff. If anything, you should be tracking everything even more than you've ever done to make sure if there is something.

that starts to go awry, you can correct it really quick. So my suggestion is keep your stats weekly and keep monitoring them. So if something happens, you could course correct really quickly so that we don't have any kind of drop off or any kind of red flag that would be created for, a buyer, they don't want to see that.

Sometimes people expect a little bit, of, a dip, very little bit. And the best thing to do is to continue to grow the practice during this time of what I refer to as the acquisition time period. Remember, you're still making the money. It's not like you're giving it away.

You're continuing to provide the care. You own the business. Act as if there is no sale process in place. Okay. The other thing that I want to talk about is really understanding and being able to explain your financials. This is so important. So many people, I get financials from people. So let's just use a profit and loss as an example, not talking about the profit and loss that your accountant might tell you is in your tax return.

That's not what we're talking about. This is a standalone document. For most practices, we're looking for the short version. It's one or two pages. You should be able to understand and explain every line item on that profit and loss statement. And if you can't, you need to get with your accountant and be able to explain it.

These are the questions, these are the documents that the buyers and the bankers are going to continue to ask questions on. If you can easily provide answers, Again, that's providing a comfort level for the buyer that you're an efficient business owner, you understand your financials, and you're easily able to communicate what each line item means.

Everyone's P& L is different. There are no two accountants that do them the same, so sometimes they just group or lump stuff together, and that's where a lot of questions come in. Like they might just do a category, for example, called insurance. Insurance could have five or six things in there, some of which might be a pass through expense to a buyer, but some of it might be personal that pertains to you.

Might be your own personal health insurance, for you and your family, or your disability insurance, or your auto insurance. So really, as you're entering into this, process and continuing even once again, buyer is found and we're in this acquisition stage of the process, continue to get your monthly financial statements, your profit and loss, your balance sheets.

These are the things people look at. If you add, if your tax returns, if it's the end of the year within a couple of months, you're going to want to make sure that gets done. Being on extension might not be sufficient for a bank, just so you understand the pay upon what time of year it is.

But going through that profit and loss, and let's just say you have 30 lines on there, really understanding them. Some of them are obvious. It's your income, it's, salary, but also in salary, if your account didn't break out over that title, then you're going to want to be able to understand, what that is.

Okay. Some people will have a line item called other income. What is the other income? Do you not think someone's going to ask you that? And you, this is your business. You're presenting this business for sale. You should be able to explain every single one of these elements on any documents we are presenting to a buyer, to their team, or to the bank.

Now I understand a tax return sometimes can get a little convoluted. and complicated, and you might not understand every item on there. That makes sense that if someone asks a question about, page 29 of your tax return, we might have to refer back to your accountant to explain, how that's on there.

And also everybody has different structures. Some people are CORP, some people are LLC, some people are S Corp, everyone has their own structure. So making sure you understand Your business, your company, this is yours. You should know everything about it. You should be able to teach me everything there is to learn about your practice before I represent it for sale.

If you don't, take the time to do it. Again, especially during this acquisition stage, don't just give me an updated profit and loss that somebody requested and you not know everything that's in there. Understanding the financials of your business not saying you practice. This is your business part.

Okay, this is a business transaction that we're trying to complete here. It is important that you take the time to do that. If you have to sit with your accountant for a little bit, and go through all this and have it explained to you. I guarantee you, you'll have a easier time in this acquisition phase because everyone will understand everything that's going on.

You're going to be reflected better in the process that every single question we ask on your financials you go, I don't know, I don't know. That doesn't make any sense. How can you not know? Again, red flag. Looks bad. Will even sometimes cause a buyer to walk away. Please, take these few hints to heart.

Understand your business. Do not take your foot off the gas. Once we have a buyer, that's when some of the hard work starts to get this to the finish line. You need to do your part. I'm very good at what I do, but there is a role for you in all this that makes this process smoother.

And, again gets us to the finish line, gets us to the closing table, gets you on the other side of this process and onto relocating or retirement or whatever you're doing. I'm Dr. Randy Ross CEO of Premier Practice Consultants. I hope you enjoyed some of this information that I've shared with you.

Once again, I want to thank ChiroSecure for hosting these events and allowing me to be a part of it and coming to you here today. Hope everyone has a fantastic day. Be well.

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