Selling an optometry practice is more than deciding one day that you are ready to retire. A successful and profitable sale must be prepared for years in advance. Unfortunately many optometrists are not preparing for the sale of their practice early enough. Here are a couple of tips to clean up your balance sheet to make your practice more attractive to a potential buyer.
- Collect your receivables – Many times a change in your practice policies can clean this up quickly. If you notice that private receivables are growing then start collecting co-pays at check-in. Or maybe you notice that insurance receivables are lingering into 60 and 90 days, maybe you need to spend time training staff to create cleaner insurance claims to reduce claim rejections.
- Return or sell through old inventory – Many practices lean on staff to manage the dispensary and when the owner takes her hand out of the management the efficiency tends to decrease. This can lead to a frame here and frame there which is effectively cash sitting in the cabinet. Also, an optometry practice that does not stock contact lenses but sells a supply and ships to the patient, will effectively decrease the use of cash resulting in a cleaner balance sheet.
- Pay off debt – Debt is the seller’s obligation, so paying it off now instead of at closing will result in cleaner books that makes for a debt free practice. What buyer does not like the looks of a debt free practice?
- Resolve legal issues – An LLC or S-corp allows for taxation of the sale one time. The government taxes the sale of the assets once, whereas, a C-corp would be taxed twice. Most optometry practices are not a C-corp, but this must be considered before selling your practice. Visit with your CPA for more information. Also, any lawsuits should be dealt with prior to a practice transition.
- Eliminate excessive expenditures – Taking the time to assess the productivity of your staff is well worth the time in cleaning up the balance sheet. Practices run inefficiently are typically staff heavy, meaning staff are undertrained thus more staff are required to do a days work. Staff expenditures bring many practices below the 30% net threshold. You may need to let go of staff ahead of selling the practice.
The above list is not all inclusive but it does address areas that many optometry practices struggle to clean up. Even if you do not end up selling your practice, these tips will leave you with a much healthier and profitable business. Then when it is time to sell you will be prepared.
