It will mainly be useful to you if you’re looking to sell your business in 2 to 5 years.
It can also be something to think about if you’re just “toying” with the idea of selling your private practice.
I got in touch with Paul Welk, an attorney over at Tucker and Arnesberg, on what private practice owners should start looking at if they want to exit.
He shared with me the following 15 selling points
First thing to look at is your EBIDTA. This stands for Earnings Before Interest, Taxes, Depreciation and Amortization.
It’s really a fancy way for accountants to describe your profitability. How much profit does your practice make a year?
There’s a lot of technical information out there on EBIDTA, and there’s no way to do the topic justice in this article.
The very next thing to think about is a multiple.The concept of a multiple is simple, you can think of it like this:
Value of Business = EBIDTA (annual profit) x Multiple.
This multiple varies across industries. However in private practice it’s determined by the size of your business.
A smaller practice with an EBIDTA of $100,000 a year, may have a multiple of 3.
3. Willingness To Remain
If you as an owner just wants to sell and leave, then this reduces the value of your business. Especially if you’re doing a lot of patient care. This is because you have intrinsic value to the business.
So if you’re doing the bulk of patient care and you aren’t willing to remain, then you’re going to have difficulty justifying the value of your business.
4. Number of Locations
5. Desirability of Location
6. Diversity of Referral Sources
This is something we talk a lot about here at Breakthrough PT Marketing.
If you rely upon one orthopedic surgeon for referrals, then it isn’t good for the value of your business.
If however physicians only make up a quarter of your referrals, and you have over 200 referral sources, then your business is of much more value to a buyer.
7. Accounts Receivable and Aging
This is really about billing. If you have a lot of money owed to you, and it’s old, let’s say it was due 120 days ago, then this will harm the value of your practice. If however you are paid promptly and any money due is less than 30 days, then this will improve the value of your business.
8. Owner Reputation
This is self explanatory. The higher your reputation, the more valuable your business.
If you have a high staff turnover, and you’re hiring a new PT every 2 months, then it’s going to harm your value.
Put yourself into the shoes of the buyer. Which would you rather have? A high turnover staff, or a stable staff who are good at their job, have integrity and are reliable?
11. Years in Business
12. Profitability and Trending.
13. Payer Mix.
14. Growth Opportunity
15. EMR Platform
For the full description visit: http://breakthroughptmarketing.com/15-ways-to-increase-the-value-of-your-practice-in-2-to-5-years/