Housekeeping This presentation is being recorded CE credit is - - PDF document

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Welcome to

How to Have It All: Exit Strategies and Succession Planning

Presenter:

Clifford Carey

Communications Director EarQ www.myearq.com Ted Annis

• Sr. Marketing Specialist

Suzanne Hill Professional Development Project Supervisor IHS Moderators:

Housekeeping

• This presentation is being recorded
• CE credit is available! Visit ihsinfo.org for details
• Note taking handouts are available at ihsinfo.org
• n the webinar page.

Feel free to download now!

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Note:

This presentation highlights recognized principles commonly found in the financial arena, but in no way suggests nor should be considered as financial advice. It is recommended you consult a financial professional for specific advice regarding financial matters that may be pertinent to you or your practice. No relationship exists that represents a potential conflict of interest

• r special business relationship between the International Hearing

Society and Cliff Carey or EarQ nor any of its principals

• r employees.

Agenda

• Goals and Expectations
• Timing Your Exit
• Review the Market for Your Practice
• Succession Planning
• Q&A (enter your questions in the

Question Box any time)

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Selling your practice can be one of the toughest challenges for the small business owner.

Common Questions

• Is it the right time?
• Who will buy?
• Are there recommended strategies?
• What is my practice worth?
• What are the first steps?

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Goals

What if you could…

• Earn the best sale price while

limiting your tax exposure?

• Determine a reasonable timeline

with agreeable responsibilities after the sale?

• Identify an appropriate buyer type and leave a

legacy?

Your Investment

The fundamental valuation of your practice vs. your ability to realize it when you sell. Practices with similar earnings can differ in value.

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Seek Professional Advice

A good advisor should:

• Manage parts or entirety of

sale process

• Mitigate surprises/obstacles

during discovery

• Vet the buyer
• Help prepare financials

A good advisor must:

• Be independent
• Be experienced in hearing

healthcare valuations

• Determine a proper

asking price

• Protect your confidentiality
• Allow you to continue

running your business

Merger and Acquisition Firms

• Assist exit strategies, transition management

services

• Main goal: successful sale and highest

valuation

• May charge a retainer and/or a success fee

‐Michael Gravel, iMerge Advisors M&A Advisor Fees

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Timeline

Are you even ready to sell?

Timeline

There are three major considerations:

• Your timing
• The company
• The market

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Your Timing

Preparation

• 5‐10 years is ideal
• 3‐5 years is workable
• Less than 3 years = limited options
• Fire sale!

Company Timing

Ideal Conditions:

• Your business is growing
• You employ established, competent staff
• You have built a stable and diverse patient base

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Market Timing

Buyers

• Status: important
• Many owners at retirement age
• Significant M&A activity has already

taken place

Market Timing

Tax Implications

• Status: worth consideration
• Work with your CPA to assess impact on your

income tax and capital gains tax

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Market Timing

Interest Rates

• Status: favorable
• Inexpensive to borrow money
• Buyers can pay higher premium

Market Timing

Financing

• Status: favorable
• Non‐traditional lenders

aggressively pursuing acquisition, lending at high levels

• Cash required at an all‐time low

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Today’s Market

Who will you sell to?

The Market

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The Market

Manufacturer and Retail Option

• Well‐capitalized; may pay a premium
• Strategic acquisitions with specific benefits

– Secure channels of distribution and POS – Talent; may not have requisite staffing

• Possible employment agreement

‐Jon Anderson, Principal, J Analytic Baby Boomers, Bottlenecks, and Boosting Growth

Medical

Medical Option

• Hospitals
• ENTs
• Desire expertise and

added revenue

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Competitive Professional

Established:

• Reduce expenses through economies of scale
• Allow the owner to phase out quickly
• Many are Baby Boomers; may also be considering selling

First‐Time Buyer:

• Shortage of professionals seeking practice ownership
• May not be able to pay a premium; buying first practice
• Requires long‐term vision and planning

Barriers to Exit

Obstacles that may impede your desire to leave your practice

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Barriers to Exit

• Closure and/or penalty costs

– Contract contingencies with suppliers or buyers; lease agreements

• High investment in non‐transferable

fixed assets

– Real estate or capital equipment that is specific to one task

• High redundancy costs

– A large number of employees, or high salaries

• Potential market changes

Owner Contributions

• Commonly the most valuable intangible asset
• Major revenue contributors to the practice
• Majority of goodwill justifications (valuation)

result directly from owner’s presence

• Departure can result in loss of patients

and profits

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Tips: Owner Contributions

• Reduce the practice’s reliance on the owner

– Limit contribution to less than 1/3 of total revenue – Virtually impossible for the sole practitioner

• Hire and retain key employees who make

significant contribution to revenue

Succession Planning

How to Have It All

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Succession Plan

• Finding a successor is a tough challenge for

most small business owners.

• Exercise the same diligence as

you did to get to this point.

Succession Plan

No successor on staff?

Hire one.

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Tips: Succession Plan

• Hire smart people who can take direction;

encourage entrepreneurial spirit

• Give your employees freedom, but with

strings attached

• Encourage participation in decision making,

ideas, and action plans

• Reward them; consider profit sharing

Conclusion

Jump the Barriers!

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Selling Your Practice

• Can be an unnerving experience
• Seek the proper guidance
• Align your expectations with reality
• Prepare based on your

company and the market, not your desires

• Be patient and maximize

your return

Suggested Reading

• The Exit Strategy Handbook: The BEST Guide for Selling Your

Business by Jerry L. Mills

• Exit Strategy: Maximizing the Value of Your Business by

Thomas W. Lyons

• The E‐Myth by Michael E. Gerber

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Questions

Enter your question in the Question Box on your webinar dashboard

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THANK YOU FOR ATTENDING!

Contact Clifford Carey: ccarey@earq.com Visit www.myearq.com For more info on obtaining a CE credit for this webinar, visit www.ihsinfo.org