How to Sell a Healthcare Business
If you’re planning to exit your healthcare clinic or medical practice, selling your business can be a strategic way to ensure continuity through ownership transfer. There are many reasons why you may want to sell, such as:
Retirement
Relocation
Cashing out of investments
Exploring new business ventures
Transitioning into a niche medical or health field
Appointing an experienced business leader
Securing an owner with ample investment capital
Selling a healthcare business can be challenging due to industry-specific regulations, red tape, and due diligence requirements. The process of finding the right buyer or business partner will likely be thorough, as you may need to identify a replacement medical professional with the right skills and experience.
For example, if you are selling a private podiatry clinic, you might seek a specialist band 7 podiatrist experienced in treating high-risk patients. If you’re selling a mixed physiotherapy clinic, you may focus on finding a buyer with expertise in both NHS and private services.
Preparing to Sell Your Healthcare or Medical Business
To ensure a successful sale, consider working with a business broker experienced in selling healthcare practices. A healthcare business broker is familiar with industry best practices, market trends, and has access to potential buyers in the sector. Brokers often have experience with various types of healthcare businesses, including:
Medical practices and health centers
Sexual health and family planning clinics
Pharmacies
Dental or orthodontic practices
Mental health clinics
Psychotherapy or psychologist clinics
Dietetics and nutrition clinics
Opticians
Podiatry clinics
Physiotherapy clinics
Physical therapy clinics
Nursing and care homes
Working with a broker can help build value in your practice and increase the likelihood of a successful sale. Strategic steps such as accelerating income, collecting outstanding payments, and reviewing expenses can streamline operations and maximize efficiency. Additionally, adjusting contingency plans in response to market conditions (e.g., post-Covid-19) can help present your business as a stable investment.
Challenges Facing Healthcare Businesses
Several challenges in the healthcare industry may impact the sale of your
practice or its value, such as:
Funding Issues:
Cuts to local authority funding for social care are making it harder for healthcare businesses to cover essential costs like staff wages.
Staffing
Labour shortages and rising wages due to National Minimum Wage (NMW) increases, as well as reliance on expensive agency staff, are increasing costs.
Brexit
Healthcare businesses that rely on EU workers face staffing difficulties due to
post-Brexit skills shortages.
Operational Costs
Rising infrastructure and R&D costs may necessitate capital expenditure to
increase business value before a sale.
Covid-19:
Managing Covid-19-related services (e.g., vaccinations, long Covid care) and tackling backlogs, alongside investing in safeguards like PPE, may impact business operations.
Hiring experienced brokers who understand the nuances of healthcare businesses is crucial for navigating these complexities, from valuing the business to finding suitable buyers and ensuring a smooth post-sale process.
Preparing Your Healthcare Business for Sale
Early preparation is key to selling a healthcare business. Work with your accountant to update financial records and improve operational efficiency. Breaking down the sale preparation into manageable stages—updating property aesthetics, settling financial affairs, and completing administrative tasks—can help increase value.
The process typically begins with a professional business valuation, which will be outlined in a sales memorandum (also called an information memorandum). This document includes key details like company background, financial performance, customer breakdown, employee structure, and the sale price. Confidentiality agreements may be required to protect sensitive information.
Due Diligence
Potential buyers will conduct due diligence to ensure that the information provided is accurate and reliable. They may request warranties or indemnities to protect their investment:
Warranties: Legal statements of fact about the business, allowing buyers to claim
compensation if the information proves inaccurate.
Indemnities: Protects buyers from unexpected liabilities post-sale, offering
compensation without legal action.
Professional guidance is essential when entering into such binding agreements
to avoid excessive future liability.
How Much is My Healthcare Business Worth?
To determine the value of your healthcare business, arrange a professional valuation. Several valuation methods, such as industry multiples, price-to-earnings ratios, or EBITDA, can be used. Business brokers, especially those with healthcare expertise, can provide valuable insights and market data on comparable sales.
The fair market value will depend on several factors:
Property: Freehold/leasehold status, location, treatment rooms, and quality of fit-out.
Financial Position: Cash flow, reliable income, and asset value.
Goodwill: Reputation, customer service, and professional relationships.
Growth Potential: Additional services, specialist offerings, and risk mitigation strategies.
We offer a healthcare market appraisal service to guide you through placing your business on the market. Our valuation team specializes in healthcare sales and will ensure you get the best market value for your practice.
Value My Healthcare Business: What Is It Worth?
Once you’ve agreed on a sale, the terms will be outlined in a Letter of Intent (LOI), which sets the timeline for the sale and payment details. This document is usually non-binding but indicates serious intent from both parties.
As experienced brokers in the healthcare sector, we also support the post-sale process, including handing over operations and registering the new provider with relevant authorities, such as the Care Quality Commission (CQC), if applicable.
Why Choose Casa Business Sales?
Selling a healthcare business can be complex, but with our expertise, we’ll guide you through every step of the process. Our team has access to over 10,000 potential buyers and runs tailored marketing campaigns to maximize your chances of finding the right buyer.
We begin with a thorough valuation to establish your business’s financial worth, giving potential buyers a clear starting point. For advice and guidance on selling your healthcare business, request a consultation with our team. We’ll ensure a smooth, successful sale and support you through the preparation process.
Sell My Healthcare Business
