Buying a practice from another chiropractor is an ambitious and exciting career move.
When approaching a major undertaking such as a practice acquisition, it’s best to begin the process with a thorough action plan.
Have you found an existing chiropractic office that you’d like to explore as an acquisition target? Here are the most important factors to consider before proceeding with a purchase.
Determine the Value of the Practice
After identifying a chiropractic office that you might want to purchase, the first thing you need to do is get an idea of how much the practice is currently worth.
While you’re in the early stages of exploring a number of practices, you can produce your own preliminary ballpark figures. However, when it’s time to zero in on a target, you should have the practice professionally appraised in order to gain an accurate valuation. Work with a broker who specializes in medical practice appraisals and transactions.
As you get a feel for the market and review your financial capacity, determine a price range that you’re willing to consider. Additionally, decide how important price is compared to other factors, such as location. These steps will help you efficiently eliminate practices from consideration, or short-list them, after determining their values.
Examine the Practice’s Financials
Once you’ve gained an idea of what the practice is worth, you can begin to examine whatever financial records are available, either through public access or by request.
Financials include reports and statements that document the practice’s financial performance and financial health. The data you should review include revenue, expenses, outstanding debts, and profit margins. If possible, acquire performance data such as how many patients the practice treats on a monthly basis.
Additionally, get an idea of the monetary value and condition of the physical products owned by the practice, many of which would likely be included in a sale. These may include x-ray machines, adjustment tables, massage chairs, computers and monitors, and software.
If the practice is currently carrying extensive debt, you’ll need to make sure that your sale agreement clearly outlines debt responsibilities. The previous owner may retain their debts after the sale, or you may be able to negotiate a lower sale price in exchange for assuming business debts.
Analyze the Practice’s Location
Where is the practice located? Just because an office is within the geographic range that you’re considering doesn’t mean that it’s in a location that meets your needs.
An ideal chiropractic office location is:
- Highly-visible from the street
- Accessible from major thoroughfares and/or public transit options
- Near a population center
- A convenient commute from your home or your other office locations
- Not too close to competing practices
Along with geographic location, review the physical details of the space. These include parking, accessibility features, structural concerns (roofing, carpeting, etc.), and the overall attractiveness of the office building’s interior and exterior.
Learn About the Practice’s Staff, Vendors, and Contractors
Learn about the people behind the practice’s current operations. How large is the staff? How experienced are they?
Additionally, look into the non-staff contractors or companies that provide goods and services for the practice. Even a small chiropractic practice may be maintaining a surprisingly large number of professional relationships, from labs and software firms to landscapers and cleaners.
As you review the practice’s staff, vendors, and contractors, consider which relationships you would keep or move on from as a new owner. Look for potentially wasteful spending as well as areas that may need additional investment.
Consider the Practice’s Property Lease
A final factor that bears careful consideration is the lease agreement for the space that the practice currently occupies. Learn the length of the lease, the monthly rent, and any use restrictions that are in place.
In the transfer of medical practice ownership, a landlord may end up serving as a key third party. The landlord may not be motivated to consent to an ownership transfer within an existing leasing term, so it’s wise to anticipate and deal with lease-related issues at the onset of your negotiations.
Get More Tips for Practice Acquisition Today
At Aligned Mentoring for Chiropractors, we help dedicated chiropractors grow their practices. Whether or not you’re currently in the market for a new office, there are growth strategies that the AMC team can help you implement.
To learn more, book a no-pressure consultation with Aligned Mentoring for Chiropractors today.
