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It’s An Art Form

It’s An Art Form August 10, 2022

Transitioning your practice, whether to another optometrist or a corporate acquirer, comes with a myriad of opportunities and pitfalls. The key to accomplishing what you desire is awareness, which takes exposure and experience. Just as your professional skills develop over time, so do deal-making skills

Whether selling or acquiring, the issues are similar albeit from a different perspective. Buying or selling is like looking through the same window, but from different directions.

Deal-making is about preparation. Before you embark on any kind of transaction it’s important to think strategically. Here are three questions that I use to explore my clients’ objectives.

a) What are you really trying to accomplish? Really!

b) What is the right way to accomplish it?

c) Are you “partnership material?”

Choosing the right strategy for your specific situation is critical to your success. Often, just as you experience with patients, what you think you need and what you really need are sometimes not the same.

Regardless of your specific situation, there are some fundamental steps to prepare for any transaction.

· Know Your Numbers: Accurate financial controls are paramount. Clearly understand your financial picture, both personal and professional. Sloppy accounting results in lower valuations and mistrust…and kills deals.

· Operate for Profit: Your practice value will be largely based on cash flow. If you’re not operating at maximum profitability, you’ll not achieve maximum return.

· Eliminate Nepotism: Employed family members can be problematic. Your buyer must look to replace multiple parties. Nepotism can cause mistrust and introduces unique dynamics. Prepare early for the exit of family members.

· Ensure That Your Assets Are in Prime Condition: There are four legs to the value of your business; you, your team, your physical plant, and your financial performance. Make sure you’re ready to transfer your brand equity. Get the right people on your team and the wrong ones off. And make sure that your equipment and facility are in top condition.

· Know What You Want: Explore and define, in advance of any deal, what it is that you want. That said, your objectives must be realistic. Just because you have invested 30 years in your business doesn’t mean that it carries a value beyond that of Fair Market.

· Get Time on Your Side: You will invariably make a mistake or two with initial forays. Give yourself the time to make them and recover.

Designing transactions is an art form. While the numbers must make sense, there are many elements that go way beyond price. Is the seller staying on for a transition? Who’s responsible for what aspects of the transaction? Can the cash flow support the debt and deliver a reasonable income and Return on Investment? Does the practice need to be re-branded? Is there a manager in place? What about family members? How will warrantees be handled? What are the legal and tax considerations? What’s the condition of the assets? The facility? What’s the skill level and tenure of each team member? The answers to these and other questions drive the value of the business. But focusing on price up front can divert your attention; resulting in a higher cost or worse, a missed opportunity. In the deal-making world, remember…No one agrees to anything until everyone agrees to everything.

At the end of the day, every transaction is unique. What appears simple WILL end up complex. Knowing the right questions to ask is mission critical. Make sure you’ve got time and experience on your side.

Preparing your practice for any deal, and then running the rapids to completion, is no simple feat. Don’t underestimate the complexities. Surrounding yourself with the right resources will make your process easier, providing a higher return on your life’s investment with less stress.

Every transaction, every partnership and every employment relationship are unique. The sale of your practice will likely represent the largest and most complex transaction of your life. Make sure that you’ve done your homework. Surround yourself with a trusted advisor that can help you shoulder the responsibility that comes with significant transactions.

For a no-obligation discussion about your specific situation, give us a call.

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