Sell my healthcare business or medical practice

Guide to selling your healthcare clinic or medical practice

How to sell a healthcare business

If you’re considering planning an exit from your healthcare clinic or medical practice, the business sale route is a viable option that can secure business continuity through ownership transfer.

There are many reasons why a business owner may wish to sell a business, such as:

• Retirement
• Relocation
• Release cash from investment
• Pursue alternative business venture
• Enter niche medical or health field
• Appoint an experienced business leader
• Appoint an owner with unrestricted investment capital

Selling a business in the medical and healthcare industry can be challenging due to a host of industry expectations, red tape and due diligence requirements. The search for a business buyer or a new practice partner is likely to be meticulous and entail searching for a replacement medical professional with niche specialisms and practical experience.

For example, to sell your private podiatry clinic, you may limit buyer interest to specialist band 7 podiatrists with experience in working with high-risk patients at a clinical level. Alternatively, to sell your mixed physiotherapy clinic, you may refine your search for a business owner with experience in delivering both NHS (National Health Service) and private services.

Selling my healthcare and medical business

Prepare for the business sale process by appointing a business broker with experience in selling a medical practice or health clinic as they are more likely to be familiar with industry best practices, market trends and have connections with potential buyers in the healthcare sector.

A business broker may have varied experience in selling a variety of private and public sector businesses in the healthcare and medical industry, such as:

• Medical Practice and Health Centre
• Sexual Health and Family Planning Clinic
• Pharmacy
• Dental Practice/Orthodontic Practice
• Mental Health Clinic
• Psychotherapist Clinic
• Psychologist Clinic
• Dietetics and Nutrition Clinic
• Opticians
• Podiatrist/ Chiropodist
• Physiotherapist
• Physical Therapy Clinic
• Residential Nursing and Care Home

Planning the sale of your business can help build value and increase the likelihood of a successful business acquisition. By taking strategic steps in the run-up to the sale of your business to accelerate income, collect outstanding payments and review outgoings, you can streamline company operations and maximise efficiency. 

By upgrading your contingency plans in response to the coronavirus pandemic (Covid-19) and current market conditions, you can present your business as a safe investment highly geared against potential risks.

Several complex challenges face the healthcare industry – in both the public and private sector - and will potentially have an impact on the sale of your business and how much your clinic or practice is worth. In addition to providing financial records as standard, you need to focus on the challenges you face every day and demonstrate how they are overcome.

Funding

• Drastic cuts to local authority funding for social care is making it difficult for healthcare businesses to cover essential costs, such as staff wages
• Owning a clinic or practice can become unsustainable over the long term without reliable income streams

Labour costs

• Rise in wages following National Minimum Wage (NMW) increases
• Using expensive agency staff to tackle staff shortages

 Brexit

• Healthcare companies often rely on low-wage workers from European Union member states. Following Brexit, the evident skills shortage is contributing to long-term staffing issues

Operational costs

• Costs are rising to maintain business infrastructure and R&D (research and development) efforts. Capital expenditure may be required to increase business face value before its sale

Covid-19

• Expanding Covid-19 services, such as long Covid-19 care, vaccinations and boosters
• Tackling Covid-19 induced backlogs and increased patient demand
• Investing in Covid-19 safeguards, such as personal protective equipment (PPE), enhanced cleaning and Covid-19 healthcare training

Hiring experienced business brokers with an understanding of the healthcare industry to provide support pre-sale, during the sale and post-sale is essential. From valuing your healthcare business, sourcing a suitable buyer, to distributing the proceeds of the sale tax efficiently, a business transfer agent can advise you throughout each stage of the journey.

Preparing your healthcare business or medical practice for sale

By preparing early to sell a business, work with your accountant to bring your company accounts up to date and review the cost-efficiency of your operating methods. By breaking sale preparation into stages, you can gradually tackle administrative tasks, update property aesthetics, and settle outstanding financial affairs to increase value.

In practice, the process starts with a professional business valuation to find out how much your practice is worth, for which the details will be included in a sales memo, also known as a sales memorandum or information memorandum.

A sales memorandum contains essential information, such as company background, business referral data, customer breakdown, financial performance, employee structure, property details and sale price. You will need to prepare a report on company finances for the viewing of interested parties, including financial statements, profit forecasts, asset valuations, debts, and liabilities.

The information memorandum is distributed to interested parties and you may prepare a confidentiality agreement to be signed before the issue of the sale memo to prevent the distribution of sensitive financial or operational information. You may grant site visits upon request to give potential buyers a better picture of the proposed investment.

Due diligence

Those particularly interested in buying your business will undertake due diligence measures to ensure the information they have been given is accurate and reliable enough to use as a basis for their investment decision.

They may request warranties or indemnities that offer protection in the future:

• Warranties are statements of fact about your business. They are legal documents that allow the buyer to claim compensation if the information provided is later found to be incorrect
• An indemnity allows for the buyer to be directly compensated by you for unexpected liabilities following the sale, without them having to go to court

Again, it is vital to obtain professional guidance when such binding agreements are requested by purchasers. This will protect you from taking on excessive future liability and limit your exposure to the risk of personal debt.

How much is my healthcare business worth?

To find out how much a business is worth and how much it could sell for, arrange a business valuation. Many company valuation methods can be used to value a business, such as industry multiples, price-to-earnings ratio, or EBITDA. Business brokers with national business sales experience are well-positioned to provide company valuation services, supported by a host of data on comparable sales.

Healthcare businesses naturally depend on a combination of practical skills and technical knowledge to deliver a first-class service, much of which is non-transferable. Therefore, when calculating how much your company is worth, the fair market value will be determined by many factors, such as:

• Property: Freehold/leasehold, floor space, individual treatment rooms, equipment prep room, quality of fit-out, fixtures, fittings, prominence of location (footfall % and radius to main health centre)
• Financial position: Cash flow forecasting, reliable income (referred business), asset value
• Goodwill: Customer service, reputation, professional relationships
• Growth potential: Rent from treatment rooms, out of hours services, enhanced services, additional services, specialist services, risk mitigation

We offer a healthcare market appraisal service to guide you through the stage of placing your business on the market, as directed by the Selling My Business team. We have a dedicated, in-house valuation team who are specialists in the business transfer industry with an extensive background in healthcare business sales. They will take a microscopic approach to valuing your healthcare business and answer ‘what is my healthcare business worth’ to ensure that you attain market value or more for your business. 

Value my healthcare and medical business – how much is it worth?

Once the sale of your medical practice or health business is agreed upon, the terms will be detailed in a Letter of Intent (LOI) which is non-binding in most instances but indicates serious intent from both parties. Also known as a Heads of Term Agreement, the document establishes a timeline for sale as well as details on how payment will be made.

As experienced business brokers in the medical and health field, we recognise that the post-sale journey is just as important, including the handover process and registering as a new provider with CQC (Care Quality Commission), if applicable. Our business brokers will run through how to sell a business, how much a business is worth and how to value a company.

Supported by our in-house team of business valuers, we offer a healthcare business valuation.

Why use Selling My Business?

We understand that preparing your healthcare business, clinic or supplier business for sale can be challenging, taking into consideration health standards, regulations and marketing to a niche customer base.

The Selling My Business team have a database of over 10,000 interested buyers and a formulated marketing campaign spanning nationwide, tailored to each disposal to help maximise the chances of finding a buyer. The first step is to value your healthcare business to calculate the financial worth and to give prospective buyers a starting point.

If you need further advice and assistance in selling your healthcare business, request a consultation with Selling My Business. We will ensure a smooth process and take into account the stages of preparation you need to undertake ahead of the sale. Call one of our experts in complete confidence.