Selling a practice/business involves a number of intricate steps. Here's a general overview of the process. We're here to assist both parties (sellers and buyers) through every step of the way.
The initial step in selling your business will be establishing a fair market value. In order to establish a selling price, we analyze a number of key performance indicators including: last 3 years revenues and profits, operational systems in place, management & personnel, client/patient concentration, payer mix, cpt code mix and facilities (location, lease, equipment, etc.). Well run profitable practices/businesses sell between 2-5 times net annual profit. We work with your CPA to analyze the financials.
Once a fair market value price is established, together we will create the confidential business offering (CBO). The CBO is specific to the business being sold (revenues, profits, key personnel, facilities, etc.) but is generic. We do not include the name or address of the business. Once the CBO is complete, we send that to our large buyer pool consisting of private equity groups, strategic buyers (buyers in the same industry searching for additional practices/businesses to add to the existing business) and individual buyer/investors. We also advertise the listing on major national business finding websites as well as direct mail, email and calling on buyers in the same field.
After completing the CBO and bringing the business to market, we usually get offers in the form of a letter of intent LOI within 3 weeks of advertising. The LOI will state what the offer is and will be accompanied by proof of funds from the buyer. Should the offer be accepted, the next step is the due diligence process.
Once we have an accepted offer, we start the process of verifying what was stated on the CBO. The buyer will have their CPA and business attorney review the books & records, the operations of the business and conduct equipment & facility inspection. The usual time for due diligence is 30 days, but may be shorter or longer depending on the size and complexity of the business.
After due diligence is completed, and both parties are satisfied with what was discovered, we move to the escrow phase. Escrow is a neutral 3rd party which conducts a lien search of the business, collects and holds buyer funds and eventually releases funds to the seller. During escrow, leases are transferred, all buyer funds are deposited, and any outstanding business debt is payed. Escrow generally takes around 30 days to complete.
The transfer is complete when escrow is closed. After closing, the seller usually trains the buyer on how to operate the business and introduces buyer to staff, vendors and clients/customers. The training period is usually between 1-2 months and is included in the sale price.
Our selling fees are at industry standards. There are no up-front fees, retainer fees or fee for the valuation. Succession fees are paid at close of escrow from the proceeds of the sale. The fees are as follows:
-10% on the first $2M
-8% on the third
-6% on the fourth
-4% on the fifth
-2% on the remainder
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