By Rod Johnston, MBA, CMA

Why use a Chiropractic Broker to Sell Your Practice?
After many years of hard work, long hours, and substantial investment that go into building a chiropractic practice, you're now thinking about selling the practice. It's easy to assume that the practice will sell quickly and for a great price when you are ready to sell. Feedback from doctors who have recently sold their practices shows that the process is more complicated and stressful than anticipated. This is why it is essential to hire a chiropractic broker to help guide you through the process.
Potential individual buyers and corporate buyers will have experts who can help them navigate the sale. You will also need someone to advocate for you and help you understand the process from start to finish. In most cases, the last time you were involved in a practice sale was when you bought the practice, which means you need someone to help you navigate the process.

Benefits of Hiring a Broker
Here are just a few reasons why hiring a chiropractic broker to assist with planning and selling your practice would be a sound investment:

Determining Fair Market Price - At Omni Practice Group, we have certified practice appraisers that put together a valuation to maximize a fair market sales price for the practice and real estate (if applicable).

Develop a Marketing Plan for the Practice while Maintaining Confidentiality - Omni provides confidential marketing and advertising services for your practice that do not identify you or your practice until a buyer is screened and signs a confidential Non-Disclosure Agreement. Omni also provides the financial prospectus for your practice along with confidential personal showings of the practice to potential buyers. Finding the right buyer that you will want to take over your practice can take some time. Good practices can sell quickly, but some can take months or even a year to sell.

Letter of Intent - Omni brokers negotiate on your behalf, a Letter of Intent with your approval for the purchase price of the Practice and the Accounts Receivable. Your broker will also guide you through the due diligence conditions for bank financing, help negotiate a new lease agreement, non-compete agreements, and other conditions that both the seller and the buyer will agree on. If real estate is included, your Omni broker will determine the value of the real estate with a “Broker’s Real Estate Opinion” that is used to market the real estate with the practice.

Finalizing the Sale - Your Omni broker works with you to determine a possible closing date based on whether your practice has real estate to sell or a lease that will be negotiated with the new owner. Omni's brokers work with attorneys to finalize the Asset Purchase Agreement for both the seller and the buyer.
Omni’s 70-point-plus checklist helps guide both the seller and the buyer through the process of items to be completed prior to the sale closing.
A banker at one of the major banks recently said a “High percentage of deals that fall apart is due to the seller not using a chiropractic broker.” Using a broker typically saves sellers a lot of time, money, and headaches in selling their practices. 

Omni Practice Group has been helping chiropractors for over 10 years with the planning and transitioning of their practices. If you’re thinking about selling now or in the next few years, give us a call for a “free consultation” to help you determine a plan that works for you and how we can assist with a smooth and profitable transition. 877-866-6053, [email protected]

Cash is king is an old adage used to describe one of the keys to success in business as well as personal finances.  Cash is essentially physical money or liquidity you have available.  While cash may be king when it comes to having cash on hand, another vitally important ingredient to the success of a practice is Cash Flow.  Cash Flow is the amount of money you have available in a given time period after you have paid all of your expenses (payroll, lab, supplies, debt, etc.). 

When analyzing a practice, how do you know how much true cash flow the practice has available? You cannot simply look at a practice’s tax return or a profit and loss statement and know how much cash flow the practice has.  There are a number of steps that someone evaluating a practice would take into consideration when determining the correct cash flow.  Those steps are as follows:

1. Start with the Net Income of the practice.  This is the total revenue or collections minus the total expenses.
2. Add back the owner’s salary and any taxes associated with the owner’s salary.
3. Go through the expenses and “add back” those items that are non-essential to the practice. These are expenses that are for extra-curricular or out of the ordinary expenses. These typically include travel, staff meetings, interest, depreciation, owner life insurance, etc.
4. Calculate what your debt service payments will be by using a mortgage amortization calculator.  You can use bankrate.com or another online calculator.  Use a conservative interest rate based on current market rates for practice loans and a 7-year term.  Subtract the debt service payments from the above 3 items.
5. The result will be the cash flow to the practice after debt service based on the current state of the practice. This will be how much is available to a potential buyer for his/her personal salary, upgrades, updates, etc.

This Sample Cash Flow Analysis shows that without changing a thing, you will earn $92,041 from the practice after paying the note payment on the loan.  Note that you can’t stop here.  If the cash flow looks low, there may be a reason.  The current state of the practice may not be the best run practice.  Perhaps salaries are too high, the owner uses the most expensive vendors, or they employ a family member to clean the office at a high salary. There may also be procedures in the practice that the current doctor does not do, but you can.  If you keep looking at a low cash flow practice and know how to fix the problems, you may have stumbled upon an incredible opportunity.

If you need help analyzing the cash flow of a practice, or how you can improve a practice, you can call us anytime for a free consultation. We can be reached at (877) 866-6053 or email at [email protected]. ​

​Correction: In a previous version of this post, Net Income was incorrectly labeled Gross Income in the calculation of Cash Flow.  We apologize for the error and any confusion.