Understanding Your Exit Strategy Options with Eric Miller
Owning a private medical practice is a journey. Initially, you’re focused on how to get the practice up and running. The next phase is how to best run the practice. Over time, you transition to how to grow and leverage the practice. And, at some point, you will want to leave the practice that you started.
Having a roadmap definitely makes the journey easier. That’s where having a business plan helps. One of the key considerations, from the start, needs to be “what does my exit look like.” Now I totally understand that this may be difficult to envision but many of your decisions will depend on where you want to head.
You wouldn’t get in the car without knowing where you are going.
In today’s episode, I speak with Eric Miller of Econologic Financial Advisors about the five most common options for exiting a private practice.
- Die with your boots on
- Just close your doors and turn off the lights
- Bring on partner physicians and selling them shares of the practice
- Sell the practice to private equity or other corporate entity
- Sell the practice to a hospital system
It’s exceedingly unlikely that you want to die while still owning/running your practice. If you simply turn off the lights then you don’t get any sale price for having built this successful business. And, for most of us, it’s unlikely that one or more of your children will join you.
Realistically, that leaves the last 3 options. Given that, how do you maximize your practice’s EBITDA so that you get the biggest return on your investment? Because your practice is an investment.
There is no “right” answer for what your exit strategy should be. You need to educate yourself and understand the pros and cons of each option. Set yourself up from the start to have multiple options by having a well-defined operating agreement that spells out buy-in/buy-out, drag along rights, decision making, partnership and more. Understand what’s need to sell your practice to others including partner physicians, physicians (not already in your practice) or corporate entity.
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