Exit strategy is a dilemma for any successful business owner. How do you hand over your baby?
There is not necessarily an easy answer to this. But with planning and the professional rigour you have already applied to build your practice, you will find your optimum path.
Starting the process early will give you more opportunity to achieve this.
What will incoming partners need to know?
While, in simple terms, you will want to be confident that your successors are competent and paying a good price to you, there is a long list of questions that prospective new owners will want to know the answers to. They are the factors which will determine the value of the practice as you step away.
Of course, there is a track record of the basic financial data that would be pertinent to the sale of any business: turnover, profit, debt etc. But, specific to a GP practice, what underpins this financial data?
The patient base
Buyers will obviously want to know how big your list is, but also its trajectory. Is it rising or falling and what is the potential for welcoming new patients?
Local demographic data will be useful here, as well as other practice provision in the area. Do you have any strategic partnerships with other NHS providers?
Do you own your premises? And if so, how will you structure the handover? Presumably you would want to sell the property, but retaining and leasing it may provide a useful source of retirement income for you, while reducing the initial capital required for the purchase.
If you yourself are leasing, what are the terms and how long is left on it? Buyers will also want to know about the running costs of the building and what kind of condition it is in.
Understanding the structure of your team will be an important part of a buyer’s due diligence. What is the balance between permanent GPs, nurse practitioners, locums and other staff? Are any other GPs part of the management? Is there harmony among staff or ongoing disputes?
Buyers will also want to understand the financials – that the drawings and salaries of the practice are sustainable.
Evidence of good recruitment and retention processes and a positive culture will be desirable to buyers.
There is more value in businesses which have turnkey operations – that is, the systems and processes are so good they practically run themselves; well, that may be over-egging the pudding a little, but you know what we mean.
Are the GP sessions and appointments well balanced for a smooth appointments system? Have you introduced appropriate technologies to create efficiencies and improve service? Have you developed a telephone/video consultation service and/or triage system, or is there good potential developing these?
Regulatory performance will also be a key point: do you have a history of positive CQC ratings?
Red flags for a purchaser
Some things will stand out as deterrents for purchasers. You’ll likely know what they are because you would find them undesirable yourself.
Examples of these could include over-reliance on key personnel – the risk of a brilliant manager or clinician parting ways unexpectedly; uncertainty over a lease; trouble with regulators; a mismatch between temporary and permanent staff.
Identifying any of these early and remedying them will prevent any nasty surprises for you or a buyer further down the line.
Writing a plan
Compiling the answers to all of the above into a report as if for a prospective buyer, but well ahead of any exit manoeuvre, will give you both a chance to place a realistic value on the practice, and also time to address any issues which will drag on the price.
Moreover, by making the practice as desirable as possible you should attract a better range of suitors, allowing you to pick the one who will best continue your good work.
We can help you get your exit strategy started, and be a trusted adviser by your side as you work towards your ideal sale. Get in touch with us for more information.