Getting a practice ready to sell requires preparing the current owner and prepping the practice as well. Both the owner and the practice need to go through a process to be ready. It certainly does not happen by chance. But the benefits are apparent.
Table of contents
- Why sell a mental health practice
- What determines whether a practice is sold or closed?
- Deciding when it is time to sell
- Getting you ready to sell: Are you ready to let go?
- Getting a practice ready to sell: Is your practice ready for a transition of leadership?
- How much lead-time is needed?
- In conclusion
Let’s begin by looking at why owners sell their practices.
Why sell a mental health practice
Let’s begin by examining this truth: In the end, all practices are sold to another, or they close when the owner retires. Obvious, right? And yet many practice owners are so busy with daily operations that they don’t pause to think about the end game much. However, we should focus on what comes next if for no other reason than to assure that we will hit our target–to sell the asset we have developed.
What determines whether a practice is sold or closed?
All owners would prefer selling their practice over closing it. But to sell, there has to be a buyer. And to attract a buyer, the practice must become an entity that can stand on its own feet apart from the current owner’s efforts. To build that sort of asset takes time, skill, and planning.
In the early days, it is not conceivable for the practice to stand apart from the owner. But later on, this is a crucial feature for creating value. For more on these issues, see:
- Selling a practice: How they become assets and how to maximize their value
- How to estimate the value of a mental health business
In short, a practice dependent on the owner is not a practice that is ready to be sold. Without changes, that practice will close when the owner retires or ceases practice. The owner may find someone willing to pay for the phone number, but otherwise, the doors will close.
Deciding when it is time to sell
There may be several reasons for deciding that now is the time to sell. Let’s consider some of the more common motivations.
Most of us do not want to work until we drop. If our practice becomes valuable enough, its sale can help achieve part of the financial goals that enable retirement. This outcome achieves several desirable consequences:
- The owner gets to retire
- Practice continues to provide the services it has
- Employees continue to have a place of employment
- Purchasers gain new experiences in leading the organization
Yes, retirement is one of the more apparent reasons for a sale and one of the best outcomes.
2. Not enjoying being an owner
There are times when the weight of being the owner is a heavy burden. And for some owners, they come to hate the role and responsibility. I have written quite a bit on these topics:
- How to overcome employee betrayal: 5 steps to love resiliently
- How to make sense of soured workplace relationships: Attachment injuries
- Addition by subtraction: Types of difficult, disastrous employees
- When we need to fire an employee
- How to overcome crises–When several clinicians leave
- Reducing in-the-trench psychotherapy to focus on practice management
- Using staff complaints to make your organization great
- Why effective leadership is lonely and exhausting
From reading through the above titles, you can see some of the owners’ challenges. Several of these put together may be enough to make one look for an exit.
3. The practice needs more energy, money, or a different skill set than the current owner possesses
As practices mature, they become a thing unto themselves. And they need proper nourishment to grow appropriately. Whether in time, energy, skill, or money, a practice’s demands can stretch an owner to the limit. Therefore, a wise owner will find the needed resources to keep the practice growing. One way to obtain what is needed may be to get the practice ready to sell. That could mean selling only part of the practice or the whole thing.
4. Owners desire to move to the next challenge
One last reason to sell is that the current owner desires to do something else or move to a new area. Not everyone wants to stay tied to a practice for the rest of one’s career. And, of course, the owner has options. Selling the practice is one.
Getting you ready to sell: Are you ready to let go?
Selling a practice is both a financial and emotional process. In other posts, I go into the many economic facets of making a deal happen, but in my experience, the emotional aspects can sneak upon us. Getting the owner ready to sell is often neglected in the process.
In my case, I returned to psychotherapy in preparation for the transitions. And even with that preparation to sell the practice, it was still challenging.
For example, to sell means transitioning from having many conversations and decisions about the practice each week to nearly none. Furthermore, in my case, the sale meant going from having 50 people who cared about my work decisions to zero.
Furthermore, my schedule went from jam-packed appointments to only one or two a day. And in truth, some of those things on my retirement calendar were not urgent or even necessary. It took months to years to get used to a day with nothing on the schedule. These days, I love an unscheduled day. We always find good things to fill it.
Of course, I knew that these transitions were going to happen. And indeed, that is what I wanted. But that does not negate the inevitable disorientation that comes with such changes. In short, getting the owner ready to sell is well worth the effort.
Getting a practice ready to sell: Is your practice ready for a transition of leadership?
Determining your practice’s readiness for a change in leadership is also not easy to figure out. While everyone in the organization may know that the practice will change, some are not eager to make that journey. And while we cannot base our decisions about selling on what pleases others, properly informing everyone of what is coming may help them find the silver lining.
How much lead-time is needed?
Sometimes people wonder about how much lead time is optimal. I believe the answer varies based on many factors.
For example, in my case, I let key people know of my time frame about eight years before the actual sale. Some advisors thought that was way too early, but that was when we started forming a plan that included moving staff into new positions. I was concerned that my clinicians were intuitive enough that moving staff around would raise questions. Therefore I let my leadership team know first so they could help me think through the plans. Once we started moving staff, we let everyone know.
A more typical situation would go like this. First, sort out your reasons for selling. I advise getting your plan together at least a couple of years before your “walk away” date. Without that lead time, you may be shorting yourself. For example, suppose you have a buyer you like willing to pay top dollar for the practice. The only stipulation is that you agree to stay on for two years to ease the transition, not an unusual proposal. Typically, a buyer is willing to pay the most money when the seller remains on for a period post-sale to ease the transition and smooth any cultural issues.
Planning and thinking through the sale of the practice may be as crucial to the organization’s health as any management decision. Indeed, the health of the next chapter stands on the shoulders of the owner’s plans for selling a mental health practice.