Tag: ROI corporation

The Importance of Self-Care for Practice Owners During a Pandemic

Human Resources

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It is amazing to reflect on how much life has changed since mid-March. We all went into 2020 with high hopes and had no inkling of the need to wear masks and social distance. We now know that these precautions are necessary to keep those around us safe.

It is difficult to constantly live within these restrictions and increased protocols. Many of us are experiencing COVID fatigue. We are stressed by not being able to enjoy simple things we took for granted. We also feel guilty because the sacrifices we are being asked to make pales in comparison to what our parents and grandparents needed to do during times of depressions and wars. We miss not having human touch—shaking a hand, giving an encouraging hug, or even worse, holding someone’s hand when they so desperately need our support.

When you are an owner, there is an added layer of complexity. Despite feeling anxious about the state of the world, you must always be positive for your patients and staff. When a patient asks how things are, you cannot tell the truth. You must put on a brave face and while it is necessary, it is also incredibly exhausting and takes a toll.

While the word “self-care” these days is associated with social media posts of face mask rituals, inspirational quotes and the like, the reality is that self-care for owners and leaders during uncertain times is so critical to our health, both physically and mentally. You can only look after your family, staff and patients if you are looking after yourself!!

Like you, I am looking for strategies to ride out the storm with my sanity in tact. We all need a plan to build and sustain our resilience.

• I focus first on being mindful of time. Time has always been a precious commodity. Since March many of us feel we are caught in a time warp or living through the plot of a sci-fi novel. We seem to be constantly putting out small fires on a regular basis and wonder at the end of the day—where did all the time go?

I challenge you to try this little exercise (it takes time but its worth it). Create a table with seven columns (one for each day of the week) and 16 rows (for each hour that you’re awake). For a week, write down what you did for each hour so you’ll have a clear idea of how you spent your time. You can make adjustments later on. Being more focussed on how you spend your time, allows you to have more control during a pandemic that doesn’t allow us to feel any control.

• It is critical to stay in touch with friends and colleagues. By now, we are all Zoomed or webinared out. I know for myself, the last thing I want to do is spend time on another call. However, many are feeling apprehensive about eating in restaurants, etc. so how are we engaging socially? It is so easy to let the absence of social physicality create self-isolation. We may see patients or clients, or chat for a few minutes to a salesperson but these encounters cannot replace the physical and one-on-one social interaction we have with our friends. A good old-fashioned phone call is a huge boost not only for the other person on the other line but for you as well.

• I recently read an article, written by leadership mentor Michael Hyatt, who suggested we identify our “Weekly Big Three”. Hyatt states the “Weekly Big Three” are your weekly achievements that will move the needle on your major life goals.

In the context of the pandemic, you identify in your working environment the three big tasks you should do for the entire week. The intention is to prevent feelings of being overwhelmed by your to-do list at your practice or office. Your weekly big three can range from learning how to use Instagram to cleaning out your email inbox. And if all you can do is a “Weekly Big One”, that is completely fine too.

• Personally the pandemic has made me stop and think about how I spend my time unrelated to business. It is easy to allow ourselves to become defined by our work but now, more than ever, developing a hobby or pursuing an activity outside of your practice or business can prove to be an excellent release of stress. There are so many facets to us and we must not feel guilty for taking time for non work-related interests. It’s absolutely fine to have unproductive hobbies or indulge in reality-based television.

• Finally, never be afraid to ask for help. Our egos and pride can unfortunately get in the way. Asking for help is one of the critical things you can do to keep yourself sane and well during these unsettling times as a practice owner.

It truly is important to look after yourself and others during this incredibly crazy time. No one really knows how long the precautions and restrictions will be in place or how long the recovery process will take. However, your practice will come through this pandemic if you look after its greatest asset—YOU. If you are proactive in looking after yourself and others, you will feel more relaxed, focused and have a renewed sense of purpose for not only surviving but managing the pandemic successfully.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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TAKE A SELFIE—See what it reveals about you as a leader

Human Resources, Managing Others, Practice, Resources

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One of the most commonly asked questions of people in my position is “what is your top practice management advice or tips”?

Appraisers and brokers are obviously aware of very successful business practices as it is our responsibility to uncover them on a daily basis when we are performing appraisals and selling practices. We also uncover some inefficiencies and, quite frankly, bad practices that we make recommendations about to our clients.

It’s Up to You.
These management “issues” might be a quick fix and something that will not take long but others may take months or years to modify and while doing so, it could be detrimental to a successful sale. We make recommendations to fix these concerns if time and willpower to get it done are available. If not, it may impact the eventual sale price but not be worth the time, money and energy for the current owner to invest in before selling.

We are not practice management consultants. There is a plethora of people that do that for a living and most have worked in a professional office at one time or another and offer their services through a multitude of social mediums, mostly focusing on efficiencies and staff training. Despite what these management gurus might tell you, tread this path with caution. There is no silver bullet to eradicate practice management issues. If you have dug yourself a hole, you will need to pick up a shovel and dig yourself out.

Are You A Good Leader?
I am a firm believer in the theory that good practice management is really a top down principle and is explicitly linked to effective leadership skills. You need to take a selfie. Are you a good leader? There are many books out there on great leadership that are readily available for all of us want-to-be or current leaders and most of the research on the topic would suggest that inefficiencies, low morale, or a toxic culture is probably created and/or permitted by the leader/owner of the business.

“Success is never owned, it is rented, and the rent is due every day.” This quote by Rory Vaden emphasizes the need to be and continue to be a leader daily.

Many business owners have big egos. That is what causes us to take risks and become business owners.

Taking a regular selfie of ourselves as business owners is an important exercise. We need to see how the world views us and be brutally honest in our assessment of the culture we have built and how we have allowed it to shape not only the environment of our business, but also ourselves to some extent. This is not an easy task. When culture is eroded through a lack of leadership, tired leadership or amateur leadership, no systems can save you. Have a good look at yourself. Only you as the figurehead can rewrite the systems that you have allowed to be laid down. Maybe go over to the mirror right now and take a picture.

What kind of leader are you?

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

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Life After COVID-19

Practice, Resources

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Before offices were able to re-open, many speculated how things would be. While some health care professionals (e.g. veterinarians) were able to remain open under restrictions, they experienced lower revenues. Most health care professionals could only guess at how to be prepared for their patients’ return.

Conjecture ran wild with all the uncertainties. Banks stiffened lending policies but if consistent revenues return, the reins will loosen again. Buyers who were skeptical, will re-enter the practice sales market once patients return and providers learn to manage despite restrictions. However, this forced sabbatical left some mature owners realizing they may be ready to sell.

Major cities have been the epicentres of infectious disease, and have always bounced back—often stronger than before. After a pandemic, people moved to cities because of job opportunities and potentially better wages. The three previous world pandemics were devastating for people and animals world-wide. They certainly changed the social and economic fabric of society. The Black Death and other plagues decimated cities in Europe and in Asia until the 20th century. The Spanish Flu killed as many as 50 million people worldwide, and yet New York, London, and Paris all boomed in its wake.

Our generation can only compare COVID-19 to major crises like World Wars and The Great Depression because of its global impact. These crises lasted years, including the pandemic of 1884, which only ended in 1959, having caused over 15 million deaths.

COVID-19 changed the way we live and do business. We’ve become diligent about washing our hands, using sanitizers, cleaning surfaces and social distancing. We stay home when sick. The pandemic is a technological equalizer making people use tech tools in the workplace and become more efficient. Most health care professionals are using some form tele-medical advice for consults and remote monitoring. Tele-medicine of all kinds (optometry, dental, veterinary etc.) is positioned to transform access to health care services for children and seniors, for remote communities and those who face travel, physical mobility, and other barriers.

For health care practitioners, despite the financial hardships endured by practice owners, COVID-19 created a few positive outcomes. They are taking increased precautions to control cross-infection and understand that any patient has the potential for disease transmission. Patients appreciate the extra precautions now necessary to ensure their safety. Practitioners will continue to protect patients and their staff by using personal protective equipment as prescribed. The use of disinfectants, up-to-date sterilization practices, dedicated hand washing, and one-time-use disposable materials facilitate safe medical visits for patients.

Other positives are the critical communication changes. The first is that the number one practice consideration is the safety of the patient and staff alike. Now more than ever, all precautions are to be taken. The second change is the documentation and consistent review of Standard Precautions guidelines with staff to ensure they are followed. Finally, the communication that these precautions are routine in the practice and are in compliance with Public Health and the regulatory guidelines.

Health care offices must provide calming information and reassurance to both staff and patients. There is conflicting information or even a lack of basic information about infection control and standard precautions. Now is the time for all health care practitioners to take their place as essential and valuable health care educator and provider.

Despite COVID-19, people need access to care. Once the vaccine is found, things will normalize but with some added positives. Hopefully, we will not forget the important lessons learned during these very challenging times.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Planning for the Unexpected

Practice, Resources

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I am an optimist. I have always had a positive attitude and I absolutely believe it is the best way to go through life. My goal is to live a healthy and active life until at least 102. However, at the same time, I have to be realistic about the situations that often arise in everyday life. We do not live in a perfect world. As a company, we have had to deal with unfortunate situations where an owner suddenly faced a crisis forcing him/her to sell.

The purpose of sharing my thoughts in this article is not to change from being an optimist to a pessimist. Quite the opposite. I will continue to choose not to focus on the negative aspects of life. However, I and by way of this article, encourage you not to ignore them.

When the owner of a practice suddenly takes ill or unexpectedly passes away, the people left behind should be able to grieve without having to worry about the office. They should not have to also determine how to handle the practice that you are no longer in. I am encouraging owners to be brave and plan for the worst. Think about this in the same way pilots and people who climb Mt. Everest do. In both cases, people must be trained in how to handle difficult and dangerous situations. Great pilots, as well as great mountain climbers, hope for the best but plan for the worst!

Our purpose at ROI Corporation is to assist practitioners in selling their practices when they are ready to exit ownership. It is a truly wonderful privilege to witness owners transitioning on their terms to pursue their dreams. Unfortunately, a terrible diagnosis or death can happen unexpectedly. Staff are completely overwhelmed and unprepared to manage the situation which will force the goodwill to erode very quickly. The tragic news of the recent plane crash in Iran showed us firsthand how offices and their staff react to horrifying news.

So, let’s be positive and optimistic and prepare for things that could happen. Every owner (and person quite frankly) needs to be proactive and put a plan in place that would protect them and their loved ones in the event of their death or severe disability. The following are simple things to implement which will help ensure some preparation, should the unthinkable occur:

1) A will and an estate plan. No further comment required.
2) Appropriate insurance that will cover practice and personal debts.
3) Owners, please appraise the practice. Knowing an accurate value is key particularly for potential insurance claims or for the sale of the office.
4) A Letter of Direction. This should be kept on file with your lawyer and practice broker. This document is usually a brief letter that states what steps need to be taken upon death or severe disability. It is fairly straightforward, and more importantly gives clear direction for who needs to do what to protect the goodwill. A broker can get started immediately and can minimize the loss of value to the practice.

By having this information organized, your family does not have to bear the burden of trying to make key decisions under massive duress. Unfortunately, when staff are upset, colleagues are trying to fill in to serve patients, or looking for a locum or associate to fill in, the uncertainty of such a tragedy, can expose the practice to easily lose 20% of its value per month.

If this all sounds complicated and difficult, just take things one step at a time. Start with just one of my four recommendations. Remember, the goal is to plan for the worst, so your family does not need to.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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How a Leasehold Agreement and its Clauses can Impact Your Exit Strategy

Buying-Selling A Practice, Finance|Wealth, Practice, Real Estate, Resources

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A client of mine is having anxiety about her expiring premise lease. She wants to stay – it’s a great building and she invested almost $1 million in leasehold improvements and non-moveable fixtures. But the landlord is inserting a building demolition clause in all the renewal leases. For someone who’s three years from retiring and planning her exit strategy, moving isn’t part of the plan.

As I explained to my client, a landlord wants AAA tenants – those who have a solid track record and pay rent on time – particularly a successful professional like her. However, all landlords also have contingency plans to sell a building and they want the right to relocate you within the building (RELO) or terminate your lease and deliver the property vacant, should the new owner want to reposition the building or demolish it (DEMO).

These clauses and rights favour landlords by making a building more valuable. Tenants hate these clauses; landlords and their realtors love them. This doesn’t discount the fact that full occupancy and high rents are still the main priorities for a landlord. But a RELO and/or DEMO clause makes the property more valuable and/or saleable to multiple interested buyers, which is another high priority of the landlord.

As a tenant, you won’t know the details of the DEMO clause specific to your lease until the renewal lease proposal arrives. My client’s current lease says that her landlord does not have to provide the renewal lease proposal until precisely six months before the current lease expires. This give tenants very little time to plan for relocation and a savvy landlord knows that. Landlords have the upper hand in these situations.

In working with my client on her exit plan, we want at least 10 years of tenancy from the date she sells in order to obtain 10-year-term financing for the buyer. Ten-year-term financing allows for increased practice sale prices. But it’s more likely that we’ll get three to five years of secured tenancy, after which the DEMO clause (or “threat”) will arise. Assuming my client sells in about three years, as per her plan, the new owner will then have as little as one or two years before being forced to move. And this, of course, will substantially reduce the sale price of any practice.

There’s the option to move and purchase a property. But that means starting the hunt for a business space now. For my client, that means about one year to find a nearby property, buy it and design/build a new office. It’s tight but it can be done. And buying real estate is always a good move, even if it is a long-term investment (think 10 years or more) and her career exit plan is three years.

It may seem to be a conflict, but don’t attach career to a real estate investment. These are
separate decisions with differing commitments and timelines. Real estate can generate income for you and your family for many years. Your practice only generates income for you while you own it and to a lesser extent, if/when you become an associate with a new buyer.

The alternative is to stay and gamble that the landlord will not evoke the DEMO clause (a 50/50 probability) until 2023 or 2024, based on what might be happening in the surrounding real estate area. Or there’s the option to sign a new lease in a neighbouring building, move and custom build another office (as my client did 20 years ago). To do so means abandoning the leaseholds of the current suite (estimated value in the hundreds of thousands of dollars) and getting a bank loan to build the new office – and be at the whim of another landlord.

Landlords will always position their holdings for resale and will not accommodate tenants who occupy a relatively small portion of their building (like my client’s practice, which is just 3% of the entire property). And so, as I suggested to her, buying her own property may be the best move (quite literally). The alternatives for professionals in leasehold agreements – who are also planning their exit strategy and career retirement – are limited.

Find something in the area you want and secure a long-term real estate investment. The bonus is that it’ll become a second retirement income once the practice is sold. As has been said by a billionaire oil tycoon, “If it appreciates, buy it. If it depreciates, lease it.” Don’t let your practice depreciate.

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

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Is This Really The Best Time To Buy A Practice?

Buying-Selling A Practice, Practice

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ABSOLUTELY!!! And here is why. If your ultimate goal is to own your own practice, then do not pass on a good office because of the times we are currently in. An economic crisis can be the best possible time to invest in yourself! As an associate, this could be the moment you buy yourself a job because no one knows what life will be like once the doors re-open.

Every recession creates opportunities. And inaction does not mean safety in uncertain times. Rather than simply hoping things will get better, you should act to improve your situation and position yourself for growth when the things recover.

If you are an associate, your income has and will be controlled by the principal you work for. If you work in an office with the principal, there is a very high chance your schedule is going to be impacted particuarly because the principal will be in the negative due to the clinic being closed. Therefore, a principal may choose to work longer hours to make up for this. You cannot blame someone for choosing to work more or take the better quality patients when they have owned the practice during this financially critical period. Is it not better to be the owner of a closed office when the doors finally open rather than an associate waiting for the return of consistent hours?

Buyers are reluctant to spend money to make acquisitions during an economic downturn. However, downturns can be an ideal time to invest in your own practice.

1) As an associate, how long will it take for you to personally return to work? How long will it take you to return to your same level of billings prior to COVID-19?
2) The country’s key lending rate has now fallen from 1.75% at the start of the month to its current rate of 0.25%. The last time the overnight rate fell so much in the span of a month was in 1992. Therefore, prime rate as of today (March 31, 2020) is 2.45% and will most likely decrease by end of year. There has never been a better time to borrow.
3) The sale will not close until the doors re-open. Again, with the closures, revenue is not lost but deferred. By default, there will be a demand for visits.
4) During this time as you prepare to take over the practice, you can engage the team to brainstorm and generate new ideas that could help you when the doors re-open. After all, the employees of an established practice are on the frontline and have a lot of insight into patient and practice needs.
5) Yes, there will be stricter protocols required for infection control. That will not change regardless if you are an owner or currently an associate.

While our situation today is different from the Market Crash of 2008, it is worth noting that Warren Buffett in a 2008 Berkshire Hathaway shareholder meeting said that the market might go up, the market might go down, the economy might fluctuate, but there will always be intelligent things to do. What an empowering message!! He went on to further say, “In the 20th Century alone, we dealt with two great wars (one of which we initially appeared to be losing); a dozen or so panics and recessions; virulent inflation that led to a 21½% prime rate in 1980; and a Great Depression of the 1930s, when unemployment ranged between 15% and 25% for many years. While COVID-19 is something we have never seen, the fact is that globally, we will overcome it just as we did these other significant crises.

Buying an office now gives you the opportunity of time. Usually, when people are purchasing an office, they do not have enough hours in the day to plan a successful transition. A personal marketing plan rarely is made, staff training to ensure the smooth transition does not happen and you as a new owner do not have the time to develop critical business skills such as financial management, effective communication. If you buy an office that does not close until the doors are to open for business again, you have the benefit of this time to make serious and achievable plans.

History has proven that during challenging times that all the great fortunes were made. The most successful self-made people did not sit home in fear because of a financial crisis.

Ultimately, during tough times, it’s important to keep a positive outlook rather than focus on a bleak picture. It takes courage to invest in times of uncertainty, but if you do it wisely, you’ll see positive results down the road. The reality is that people will still need to see their Optometrist. Healthcare has proven its ability to manage during and post financial crises.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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It’s Time to Mend the Nets: Practice Advice for Turbulent Times

Human Resources, Managing Others, Webinar

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Practice Advice for Turbulent Times

“When fishermen can’t go to sea, they mend their nets.”

 There are plenty of tasks related, and even essential, to the success of your practice. This quote reminds us of the importance of forward momentum, which in turn can ensure you return stronger than ever, ready to meet the challenges ahead.

Eye Care Business Canada have teamed up with BMO Bank of Montreal and ROI Corporation, Canada’s largest health care business brokerage, to provide a live webinar series that will help you make the most of these challenging times and help prepare your future.

We are offering complimentary educational webinars on three topics of particular relevance to these trying times, delivered by industry experts. Audience is invited to put questions to the speakers.

The Webinars will be co-hosted by Jackie Joachim, COO of ROI Corporation and Dr. Glen Chiasson, Host of Eyes Wide Open, a Canadian podcast for eye care professionals published by Eye Care Business Canada.

Keeping Employees Engaged and Motivated
The closure of offices has been a wake-up call for the importance of a strong culture. It is crucial that practice owners do not succumb to the panic. Employees look to their employers for leadership and model their behaviour, especially in times of crisis. The focus of this session is to help you keep your employees calm, engaged and informed. Practice owners will benefit from the tips and tools to keep their teams motivated while the office is closed.

Presenter:  Nava Sarooshi
Motivating teams to achieve results is Nava’s passion. She has run various workshops and consults with teams who are looking to achieve higher performance. Nava is also the President of MDP Corp, a temporary personnel placement agency.

Thursday April 2, 3PM (EDT)  

 CLICK HERE TO REGISTER NOW    

Managing the Practice’s Financial Health During Troubled Times
As a typical “black swan” event, COVID-19 took the world by surprise. Understanding the potential impact on the value of your practice and managing the financial risk associated with office closures is critical. This session will help you focus on the financial factors, especially as they pertain to the practice’s profitability and value.

Presenters:
Romal Bryce, Head of Healthcare Initiatives BMO
Romal oversees BMO Canadian Business Banking’s go to market strategy in the field of healthcare professional financing. He has been a financial services professional, primarily at Bank of Montreal, for 20 years He has held various sales, underwriting and risk-related roles in both retail and business banking.

Jackie Joachim, Chief Operating Officer for ROI Coporation
ROI specializes in assisting healthcare professionals in the Optometry, Dental and Veterinary spaces appraise and sell/transition their practices.

Monday April 6, 3PM (EDT) 

CLICK HERE TO REGISTER NOW

Key Legal Issues Affecting Practice Owners
This is the time to look at all the legal factors that affect your clinic. This session will discuss the importance of key documents such as associate and employee agreements, partnerships, incorporating and leases.

Presenter:
Artem Kobzev,  LLP Tax Chambers
Artem’s practice focuses on providing individuals and closely-held corporations with a broad range of legal services, including personal tax planning, corporate tax planning, estate planning, business succession planning and asset protection. He frequently works with owner-managers to develop and implement the strategies and structures that will enable them to meet their specific needs.

Wednesday April 8, 3PM (EDT) 

CLICK HERE TO REGISTER NOW

We look forward to e-meeting you at the webinars.

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Protect Yourself from Spam and Scammers

Finance|Wealth, Resources

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Spammers and scammers are attacking everybody. Typically, I receive up to 10 scam/spam emails a day, and fortunately, my office uses a defense system that captures about 99% of them. But recently, one slipped through my inbox.

A spammer had perfectly mimicked my email identity and my email signature. Emails came to my office staff using my exact email address. There were a few clues that made us realize later that it was a scam; however, at the time, I was away and the scammers told my staff that I demanded a payment of tens of thousands of dollars be made to one of our regular suppliers.

The spammer had duplicated an invoice that one of our suppliers had sent to us by email several months earlier. The invoice appeared authentic to my staff members. They proceeded to process the cheque. The next day, I returned from my out-of-town trip and was asked, “Tim, why was it so urgent that we had to pay that supplier bill yesterday?” I responded, “I have no idea what you’re talking about.”

The staff member showed me the emails that had been sent demanding a payment be made the same day. I looked at the emails, which appeared legitimate, but noticed a couple of words that I don’t use. One was “muchly,” as in, “muchly appreciated.” I have never used that word. It is grammatically incorrect. That was one of the indicators that the emails were part of a scam.Fortunately, we were able to stop the cheque from being deposited, and then we made
additional precautions and updated our internal security measures to prevent any such similar scams from happening again.

This was very close to being a major financial setback. Three of my staff members actually approved this cheque being deposited. Shortly after, I received another scammer email from one of my clients that appeared legitimate. His actual signature, his actual cell phone number, his actual website and some of the awards he has won were all contained in the email. The message said that he was away and wanted to get a Google gift card for his nephew and asked if I could help out by buying the gift card and emailing it somewhere for him to access.

Obviously, it was a scam and I laughed and called my client to tell him that he had been scammed. He laughed as well and said “I have to thank the scammers because I’m getting calls from people I haven’t heard from in a long time. I’m reconnecting with old friends and buddies and this is a great thing.”

Ironically, in this case, the scammers and spammers unwittingly generated a little bit of humour. It’s easy to laugh off when people can easily recognize these as scams perpetrated by amateurs and hacks using blind and rotating fraudulent email accounts to extract money illegally. But sadly, some scams are effective and they often prey on senior citizens. I have advised my father and other senior members of our family to be careful about telephone scams by people pretending to be nieces and nephews on holiday pleading for money from an older family member.

Security measures can be implemented by you, the company host of your website domain or your email provider. We can set higher security measures with our email, but of most concern is a junior staff member who might be duped and unable to recognize a sophisticated scam for what it is. This is especially true of a scam directive that has been (supposedly) dictated by the employer (read: boss) or other high ranking senior officials in the company. We need more scam (and spam) education, and we should all practice safe email!

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

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Traps to Avoid When Selling Your Practice

Buying-Selling A Practice, Practice, Resources

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Recently I have met with a number of vendors who tried selling their clinics privately. These were not good experiences for a multitude of reasons. The number one reason people do this is to not only save commission but more importantly to try and keep the sale quiet. There is a definite fear that going to the market will mean EVERYONE will discover that your practice is for sale.

Ultimately, owners want to sell to the right buyer, a person who will treat their staff and patients well. In general, most buyers also want a smooth transition. After all, they have purchased your practice and want to ensure it succeeds.

However, when you open your practice to one or a selected group of potential buyers, there are risks associated. Some potential buyers can be quite crafty particularly when they start poking around your office. Most will often conduct the first bit of research before you even know he/she is interested in buying your practice. He/she may pose as a new patient calling for an appointment, visit your website or even come into your office to get a feel for things. This may cause staff to wonder if the clinic is for sale.

Without an experienced broker, you expose yourself and your practice to various pitfalls of a private buyer.

  • Due diligence is a stressful time – to put it crudely, it is “the owner’s proctology exam”. Unfortunately, if you manage this process yourself, you will quickly find out what it feels like when a stranger pokes, prods, and looks inside every inch of your practice. You are asked to produce many documents and then, you need to answer questions as to your reasons for doing business the way you do.
  • Using an advisor who is not familiar with the industry can also negatively impact your sale and stigmatize your practice. There are many times where our appraisal is used in a private sale. Buyers then call us to clarify certain points because the person representing the owner is not providing correct answers. I am definitely not insinuating that the individual is intentionally misleading but the reality is if you do not know the market by default, you will lose a potentially good purchaser.
  • It is never good to have one person representing both the vendor and the buyer. Relationships are extremely important. However, when the party who is introducing you to the buyer will continue to have a relationship with that buyer post sale, it is natural that the advisor may push a little harder for the buyer’sinterests. This is exactly why we choose to represent vendors only. We believe you need someone in your corner fighting for you.

Selling a practice is not as straight forward as owners think. With the guidance of an experienced business broker, you will be challenged to take nothing for granted and look at the value of your clinic from a variety of angles, some of which may not be top of mind for you. To ensure you receive the best possible outcome, you must ensure that when you sell, the practice is positioned in the best possible light and that the terms, which are important to you, are negotiated properly. I always tell owners not to let what may be the biggest transaction of your life turn into something you think will be “obvious” to a new owner based on a quiet and private sale. You deserve to maximize your sale, exit ownership with dignity and to have no regrets.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Is EBITDA the Best Way to Calculate the Value of Your Practice?

Finance|Wealth, Resources

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I say no. Essentially, EBITDA on its own makes for a fairly futile statistic. There is, after all, a very good reason why you depreciate and amortize assets. To simply put those charges back in to earnings may give an unrealistic measure of your finances. Many in the financial industry will use this as a rule of thumb to help obtain an estimate of value.

EBITDA seems to be very sexy these days. Everyone is talking about practices selling for a multiple of EBITDA. Although some folks do not really understand the formula and yet they feel it is a reasonable way to value clinics. There are endless variables and measurements that factor into the value of your practice. The best way to start is with an appraisal which will extract the maximum value for your practice and go to the Open Market. One buyer who offers you a price based on EBITDA is not a market. Would you give the opportunity to sell your home to only one buyer? Also, financial due diligence may reveal a lower EBITDA which means the purchase price will be reduced from the original offer.

So what is EBITDA? Simply put, EBITDA is net income (or earnings) with interest, taxes, depreciation and amortization added back. It is a quick way to evaluate a clinic’s performance without having to factor in financing decisions, accounting decisions or tax environments. It also certainly does not factor in intangible items such as location, highly valued staff, premise lease, quality of patients, various services etc. Normalized EBITDA also adds back discretionary expenses such as travel, meals etc, which we also do when completing an appraisal.

It is important to understand that EBITDA has its flaws. You should not put too much emphasis on it when looking at the strength of your practice because EBITDA does not consider risks like the potential for future growth and your mix of patients. It does not consider whether you have an assignment or non assignment practice, offer a variety of treatments, your plan for attracting and retaining new patients, excellent terms in your premise lease, contracts for staff, and other proprietary items in your clinic.

EBITDA is based on actual financial statements. Let’s assume for a moment that your year end is December 31. Your EBITDA is $500K. You are made an offer of 6x resulting in a price of $3 million. Sounds great!! However, you are currently into your new year by 8 months and your net profit will be up because you have made many positive changes (adding more services, bringing on another associate, etc.) These positive changes indicate that your expected EBITDA will be $650K which means you are leaving $900K on the table. What a lovely gift you have given this one buyer!!

We believe the best way to place a value on a practice is to use a combination of the cash earnings method and comparables. While there are certainly many valuation methodologies, we use the cash earnings method because we want to demonstrate how much a practice can produce after all the fixed expenses (staff, supplies, rent) have been paid in order to support the doctor(s). Our appraisals never place a value on a doctor. One doctor may be very comfortable living on a draw of $100k while another must have a minimum of $200k. Same practice, same revenue but different requirements of the person providing the treatment. Being in the appraisal and sale of practices for 45 years means we have the largest data base of sold practices. Having this knowledge is critical and can help set expectations for both the vendor and buyer.

Selling to one buyer may seem like the right decision. You will, after all, save on commission. But I ask you to consider the following: a business broker can help present your practice in the best light to maximize the sale price. We have an understanding of the key values that buyers are looking for and can assist in identifying changes that can lead to a better selling price. Even more important than the final sale price is what your requirements are post sale. If your plan is to continue working, negotiating your working agreement post sale is also critical.

In the end, I always respect and admire practice owners. It is difficult being the provider of treatment as well as employment to so many. Running a business is never easy, therefore, when you come to the point in your career where selling is the option, I encourage (or challenge) you to consider taking your practice to market. Your clinic represents your life’s work. It is likely one of your most valuable assets. As such, you deserve to exit with the maximum price and dignity!!

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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