If you’re going to think about selling your healthcare business, make sure you’re doing it for the right reasons. This will help you negotiate a higher price, make sure the transaction goes smoothly, and prevent you from regretting the decision later on. So how can you tell if it’s time to sell? While there is no perfect scenario, there are some situations when selling makes more sense than others.
Reasons to Consider Selling Your Healthcare Business
–You can no longer effectively run the business
Every year, it gets a little more complicated to run a healthcare business. The government keeps adding regulations while consumers are demanding much more for their spending. You can eventually reach a point where you can’t effectively run your business on your own. In this case, selling might be the only way to survive so you can merge with a larger business that’s better equipped for this tougher environment.
–You’re sick of the stress
Owning a healthcare business is stressful work, as I’m sure you’re well aware. And it’s more than just the day-to-day grind. Now that you’ve built a successful business there’s also the fear that something could go wrong and your valuation could plummet. If you’ve had enough of this stress and just want to get out of the business, that’s a very good sign it’s time to sell.
–It’s a seller’s market
Right now it’s a seller’s market in the healthcare industry. Companies are looking to merge for strategic reasons while private equity funds are also moving into healthcare because of its high returns compared to other sectors. This makes it easier to sell and also easier to negotiate a better price. If the market is strong for healthcare deals, it may be worth getting out now while you still have the upper hand in negotiations.
Reasons Not to Consider Selling Your Healthcare Business
–There are problems with the business
If there are significant issues with your business, they could be putting you in the mindset where it’s best to get out so someone else can deal with them. This could be problems like unpaid taxes, the wrong management team that isn’t delivering, compliance issues, or poor records.
This is not an ideal solution because these problems will significantly hurt the price that you can negotiate. They can also prevent the sale from closing or leave you on the hook for legal issues after you sell. It may be better to take a year or two to sort the problems out first before you hit the market.
–You’d like to keep working
After dedicating a large part of your life to your business, it’s understandable if you’re not ready to leave. After all, many business owners enjoy running their business and seeing it grow. You shouldn’t feel pressured to sell if you’re not ready.
That being said, there are ways to structure your deal so that you could still stay with the business. Some buyers would be willing to keep you on board to manage and would make very few changes to the company culture, if that’s something you want to preserve. They could also structure the deal with incentives where you earn more by helping them reach performance targets. This could be a good compromise if you think the market is right for a sale but you’re not quite ready to leave yourself.
–You can’t find the right buyer
A successful sale is more than just a high sales price. The right buyer is also very important. This person is going to be taking over your business and employees so you want to leave them in good hands. At the same time, you’re going to be spending a lot of time with this person during the negotiations and transition period for your business. If you don’t get along, this will lead to extra stress and possibly derail the sale. If you can’t find a buyer that feels like is a good match, it’s probably worth waiting until you can find someone who is a better candidate.
Making a sale for the wrong reasons can lead to all kinds of problem. By considering these factors, you can decide whether you’re making the right choice or if you need to rethink the sale.