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Prepping for a successful practice sale

Here is a checklist to help you to get ready for a successful practice sale.

1.Meet with your financial and tax advisors.
Check with your financial advisor and accountant whether or not you are retirement ready and can afford to sell the practice. Get your accountant involved in planning the sale with the goal that you will be eligible to claim the $800,000 capital gains exemption on the sale of your practice. Make sure you plan at least 2-3 years before the anticipated sale date.

2.Do not slow down.
A decline in production lowers the practice value and it raises concerns with the prospective purchaser regarding the future profitability of the practice. Maintain your production at 180 days per year and never let the production drop at least two years before the sale.

3.Consider increasing fees.
Prepare a fee analysis and comparison to the fees charged by other offices in your community. If your fees are below average consider increasing the fees. The chances are that your patients will accept the increase and by boosting the income, you also increase the value of your practice.

4.Review the lease for the premises.
The purchaser ideally would like to have a lease term including renewals covering a 15 year period. If your lease is less than 15 years, obtain the consent of the landlord to offer additional renewal periods. Many leases have a demolition clause, which can be a deal breaker. While you may not be able to remove this clause, get the landlord to agree that the building will not be demolished for a specified number of years.

5.Upgrade your office
If you are planning to sell within the next few years you should not make any large expenditure unless absolutely necessary. However you should enhance the curb appeal, including new carpets, newly painted offices, landscaping etc., which do not cost a lot of money but will give the purchaser a good first impression.

6.Review the Associate agreement
If you have an associate with you, make sure that you have an associate agreement in place containing a restrictive covenant as well as a non-solicitation clause. Many deals collapse because of a lack of an associate agreement.

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