MDNews - San Antonio

+++++++++++++++ + + +++++++++++++++ BANKING +++ +++ ARE YOU READY to Buy or Sell a Medical Practice? By Jeanne Bennett W HETHER THEY ARE ready to retire, just starting out or interested in a change, most physicians contem- plate buying or selling a medical practice at some point during their careers. And once a physician has made the decision to buy or sell, it's not as simple as signing on the dotted line and handing the practice over to another doctor. Buying or selling a medical practice is a complex process with serious legal, financial and profes- sional considerations — and there is a lot of work that must be done to ensure a positive transition. If you are planning to buy or sell a prac- tice, there are some steps you can take to help you prepare for the process and stay on the right track for a successful agreement. Engage your advisers early. Talk to your banker, accountant and attorney and let them know you are interested in buying or selling a practice. As your trusted advis- ers, they have your best interests at heart and will be your advocates throughout this process. If they don't have significant knowledge of the health care industry, ask them to recommend another professional to you. Medical practices are very different from other businesses, and it's important that your advisers have experience with these types of sales and acquisitions so they can provide you the best guidance possible. Do your homework. Buyers and sellers both have responsibilities in preparing for a purchase agreement. Sellers must produce all of their financial documentation so the certified public accountant can facilitate a thorough practice valuation. The valuation will show you the total value of your practice, including tangible assets, nontangible assets and accounts receivable. Before 12 | San Antonio MD NEWS ■ MDNEWS.COM you can sell your practice, you need to know how much it is worth. Buyers need to research the practice thoroughly to make sure it is in good financial health, has positive relation- ships with insurance companies and, most importantly, is a good fit for them. They also need to make sure they fully understand what assets they are buying and carefully think through how they are going to finance their purchase. Be patient. A valuation of a practice can take a few months, but this is an important step in ensuring the agreement is fair for both parties. And once the valuation is complete, it still may take some time to negotiate the price and specific terms. Don't try to rush this process or get discour- aged if it is taking longer than you initially expected. It is much better to take your time and make sure you establish a posi- tive arrangement on the front end of the transaction than to risk disappointment after the sale is made. Be specific in your terms. Sellers should give careful consideration to what their expectations are after the sale. Are you retiring? Will you stay with the practice as an employee? Regardless, this will be a great adjustment, and it's important to give careful thought and planning to your next steps. As you work out the details of the sale with your buyer, there will be discussion of post-sale agreements, such as an employ- ment contract and a noncompete clause. Buyers should think through some ques- tions in these same areas. How long do you want the existing doctor or doctors to stay on board after the transition? What assets are you specifically purchasing? Make sure any terms you discuss are properly documented in your agreement to help ensure a smooth transition. Prepare for the transition. Buyers and sellers should spend time thinking through how they want to handle the transition of the practice. If you are a seller, give careful consideration to how and when you want to notify your patients of the sale and what you will do after you leave the practice. Also, make sure you are prepared to meet all the terms of your agreement with your buyer. Many buyers will want you to stay with the practice for a period of time to help with the transition or will want you to sign a noncompete agreement so you do not take any patients or referral sources. If that's the case, make sure you have accounted for that in your post-sale plans. Remember, if you are planning to buy or sell a medical practice, the first step is always to engage your advisers early. Consulting your banker, accountant and attorney before jumping into any negotiations or commitments will help ensure you begin the process on the right foot. The purchase or sale of a medical practice is one of the most significant milestones in a physician's career, so make sure you give this important decision time and careful consideration before taking this big step. Jeanne Bennett is a Senior Vice President, Private Banking Manager for Amegy Bank of Texas in San Antonio. She leads a team of professionals that works extensively with physicians and hand-in-hand with bankers from all lines of business, enabling clients to receive one-on-one, personalized solutions and comprehensive service at any time. The private banking team specializes in meeting and anticipating the needs of doctors, corporate executives, professionals, entrepreneurs, business owners, wealthy individuals and families who expect and deserve excellence and seek personalized relationship banking. For more information, Bennett can be reached at (210) 343-4556 or jeanne.bennett@amegybank.com. ■

• Cover