Cleinman Performance Partners Weekly Message

Tips to Maximize Practice Transition Success – March 28, 202

There’s an old saying, “never get into a business that you don’t know how to get out of.” In recent months, on behalf of clients, our firm has brought about closure on several large transactions with Private Equity backed consolidators. Concurrently, we’ve also completed a number of transactions between private owners.

While the appetite for transactions is strong, the value you receive, whether from a PE backed firm or a private buyer, is directly related to the quality of your homework and support. Properly positioning your practice, and clearly understanding what buyers seek, is mission critical to a successful outcome.

At Cleinman Performance Partners, we’ve been handling the details of practice transitioning for over 30 years across more than 2500 transactions. We’ve helped our clients realize billions of dollars in reward for their life’s work while taking the significant burden of the process off their shoulders. For us, we’ve not done our job until the RIGHT transaction closes. If you’ve seen one deal, you’ve seen one deal.

This experience causes us to have some concern that some of you attempt transitioning without experienced counsel, resulting in your NOT realizing all that’s possible. As you might imagine, over these many years we’ve seen some truly horrific deals; deals that should never have been even contemplated let alone consummated. This is the result of a lack of experience by the designer.

Transitioning a practice is not like selling a piece of real estate. An optometry practice has many moving parts. To secure the best possible outcome, one must know the answers to the questions that a buyer will ask before they’re asked. Anyone considering their exit from ownership, whether to a Private Equity backed consolidator or an associate optometrist, must do their homework. Knowledge is power. Here are a few tips to help ensure a successful transaction.

• Negotiations start at “hello.” We’ve seen so many challenges occur because one party or the other said something early on that provided fuel for a tough negotiation downstream. Be careful.
• Know your numbers. Getting your accounting and financial house in order before you even start shopping for a successor is mission critical. Know the value of your business going in and your options.
• The Devil’s in the details. Digging into the financial performance of your enterprise with a buyer’s eyes results in improved financial and strategic outcomes
• Timing is everything: Going to market before you’re ready can be the kiss of death. Even having a conversation with a prospective buyer to early can have a detrimental impact on the outcome.
• One buyer does not a deal make. It’s important to work multiple options so as to create competition.
• Make sure time is on your side. Starting the process earlier than you might think logical, is appropriate. In simple terms, if you’re ten years from your desired exit, NOW is the time to start the process.
• You don’t know what you don’t know. Structuring, negotiating and closing transactions takes a great deal of effort and expertise. There are, literally, scores of steps and documents involved in the process. Don’t attempt to do a deal in between patients. Surround yourself with expertise so you can maintain the performance of your business through the process.

Successful transactions come about as a result of a lot of hard work and experience. Don’t go it alone. And there are huge differences among service providers. Do your homework.

If you’re within ten years of your desired exit date, it’s not too early to have a chat. Visit our website for tips on this most important issue. And don’t hesitate to reach out to us for a no-obligation exploration.

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