Tag: ROI corporation

Insiders’ Revelations: Your practice has untapped potential and hidden revenue – exploit it!

Buying-Selling A Practice, Practice

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We were talking to a potential client the other day who said that he did not think his business was worth much. He never imagined that he’d sell it for a profit. We asked what his annual sales are, what his net income is and whether he had thought about establishing a transition plan. He said that his kids had planned to take over the business, but instead moved on to other professions in technology and software and felt that his “old-fashioned” business system wasn’t right for them.

We inquired further. I asked whether he had a loyal, repeat client list. We asked if he had a continuing revenue stream. We asked if he had ever thought of selling to his employees. Perhaps one of his competitors might be interested?

He was stubborn and proud. He paid nothing for the company because he started it on a bootstrap budget more than 50 years ago. He never borrowed from the bank throughout his career. He sacrificed on food, cars, the house he lived in and never overspent, living well within his means. His business was founded on sweat equity.

As we conversed, he began to reveal more and more, especially after we asked about his client list. He proudly confirmed that he had a very vibrant list: a steady, loyal clientele that had served him well for many years. We asked again about his annual revenue, which he was reluctant to reveal. We respected his reluctance to disclose his financials; as we are brokers, he must have thought we were just trying to get a business listing.

We talked more about his industry and where it was in terms of growth or decline. Eventually he related that he’s in a high-growth industry, something he knew all along yet had never exploited to its full potential. He admitted that he did not want to buy the equipment, hire more staff and move toward computerization to upgrade to the necessary technology— namely, do the things that would allow him to face his new competitors. He readily acknowledged that, while his long-term clients remained loyal to him, lately some had concerns about his slow delivery and service. They never complained about his quality nor his price, only about not getting his goods fast enough.

He further admitted that he was slow but he was good. In fact, he said, “I’m the best” and we believed him. So, what do you do? What would you do—buy his business? Is his business likely to fail because of the competition? Should he upgrade?

There are at least two mindsets on this, depending on whether we’re discussing a business or an optometric practice. One would believe this business is an easy picking to compete against. The other thinks of buying this business and doubling the revenue.

As a broker and appraiser these are the types of insights that present themselves when meeting with business or practice owners. The hidden value of the business is often uncovered with minimal effort. Practitioners or entrepreneurs regularly want to tell their stories and confide their trials, tribulations and triumphs over the years. One thing they’re not able or likely to do is tell a potential buyer how much business they left on the table. They might humble-brag about it and say, “If somebody younger or more competitive takes over, they will do better than me.” This revelation is left to the third party acting for the seller, and that’s where a broker comes in.

The truth is, every business or practice has untapped potential and hidden revenue. You can ethically exploit it yourself or a buyer can. Your call.

TIMOTHY BROWN

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

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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The Wisdom of A Seasoned Staff Consultant

Human Resources, Managing Others, Practice, Resources

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There is a resource reference in the summer issue of Profitable Practice magazine entitled A Startup’s Secret Weapon: Retirees by Liz Brody. Recent U.S. Bureau of Labor Statistics reveals that people 65 and older lead the way as the fastest growing segment of the American labor force. For the most part, these people have exited their former jobs and careers for retirement. Many, it seems, want more than a sunny beach, an afternoon nap or satisfying round of golf. They are not ready to go quietly into retirement and believe they have much to share given their previous experiences.

As a consequence, there are a number of companies today (YourEncore, Empowered Age, Patina Solutions, Work At Home Vintage Experts etc.) that are staffed with these “retirees” who bring expertise from a wide variety of business jobs and careers. They act as consultants as characterized by Liz Brody “who have been there and done that”. Their clients are often young millennial-aged entrepreneurs with startup business problems. These young gurus often face a business impasse they can’t seem to bypass and are stymied. While they are often superb risk takers and decision makers, they realize they need help and that more brain power and another pair of eyes is required to get them mobile again.

All entrepreneurs try to invent a new product, service or process or at least apply an innovation to an existing one. In doing so, they are repeating a journey that many others have taken before them—a few successfully and the many who got hung-up along the way. Health care practitioners are constantly searching for new and better ways to deliver health care service. Many find a successful track of operation either by perseverance or by enlisting the aid of others.

The above scenario got me thinking about my own company, which my father started and eventually sold to me. Recently my dad and the company received recognition for 45 years of distinguished service to the practice sales industry. In my case, he was always there in the background giving me the wisdom of his experience. In addition, the company had—and still has—a number of senior associates (retired dentists for the most part) who left dentistry to start a new career in practice sales. This core of elders was invaluable to the growth of our company and allowed us to be successful by avoiding many of the impasses all businesses face.

To my mind, no matter what business or health care practice you are in, it is wise to seek out the advice and ideas of both the young and old. Health care graduates today are schooled in the latest procedures and technologies and bring a contagious enthusiasm and a refreshing willingness to share with and learn from their older peers.

TIMOTHY BROWN

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

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Two Ways To Lose And why customer care is still the be-all and end-all when dealing with clients

Differentiation | Business Strategy, Practice, The Patient Journey

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I have been a long-time, loyal client of a local dry cleaner. A new owner (who I quite like) took over the service. However, it soon became clear to me that a pre-existing, long-term employee was not happy with this new owner.

One day, when collecting my clean clothes, the new owner was absent and the employee in question told me she disliked working there and asked if I knew anyone who was hiring. I suggested she send me her resume.

Our firm happened to be hiring and we interviewed her, but her qualifications were inadequate for our position and she was not offered a job. Since then I have encountered her again on a number of occasions and she remains unhappy and is unpleasant when dealing with me and other customers.

It’s possible she’s mad that we didn’t offer her a job. I hesitate to say anything to the new owner because this is a convenient location for me and I want to remain a customer. Yet, it is difficult to go to this business because of this employee.

Is this the fault of a bad new owner who doesn’t treat his employee well? Or, is this a disgruntled employee who’s angry she was not offered a job and free her from an unhappy situation? I don’t know the answer, but I know I’m not happy and may move my business elsewhere, despite the inconvenience.

When a business sells, a new owner brings new policies, procedures and an ownership style that might not suit some employees. They may become resentful about the changes being implemented. That resentment may negatively affect the new business. It’s a given that customer care and service is what makes a business successful. All it takes is one employee not providing the required customer care for a business to fail. My advice to the owner would be to terminate her, even though she was an ideal employee at this dry cleaner for many years.

In any health care practice, customer care is also crucial. My son, daughter-in-law and my three grandchildren have been loyal to the same dentist for more than 10 years. Recently, my son arranged appointments for two of my grandchildren, one at 5 p.m. and another a half hour later. There was some confusion about the appointment times, but my son looked through his messages and verified the 5 p.m. arrival time. Because he’s not the most efficient at managing the kids, he arrived five minutes late and was informed that there was only enough time to see one of the children because they had given away the 5:30 p.m. appointment to another client.

Like all young families, my son and daughter-in-law are very busy. They were upset that after 10 years of loyalty and many treatments—my grandkids have had substantial work done on their teeth—the office staff would treat them this way.

It’s possible that an administrative error occurred regarding the appointments, even if they had previously been confirmed. It happens. What was upsetting was how disrespectful the office staff was to a loyal patient and his family. My son was distraught when he relayed the story and told me that he changed health care practitioners.

The result: a young couple with three kids left their health care practitioner of more than 10 years and connected with another one closer to the family’s home. The new practitioner is thrilled to now provide services to this family of five for many years to come.

Appointment times can be confusing when texts, emails and other means of communication are used. When more than one staff member is working and reworking the appointment schedule, human error can occur. But upsetting a busy young man with family responsibilities, who’s been a loyal client for years, makes no sense. I would hate to calculate the amount of revenue lost by alienating and losing the opportunity to serve a growing family of five for many years.

TIMOTHY BROWN

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

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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Breaking Up Is Hard To Do

Finance|Wealth, Human Resources, Managing Others, Practice, Resources

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When a trusted, long-standing associate leaves, where does that leave you?

Throughout my career, many clients have shared with me the mixed feelings sparked when a long-term associate leaves the business. It’s never easy when someone leaves a practice, especially on short notice.

I’ve heard this story hundreds of times and listened patiently while a practice owner tells me how this feels. They handpicked their associates. They recruited them right out of school. They taught them everything they know. They helped them build their career. In short, they more or less helped them get to where they are today.

And then that young protégé they mentored says, “I’m moving on.” Sometimes he or she gives a lot of notice and is honourable about it…and other times he/she gives no notice or doesn’t even show up and sends a resignation by email.

I’ve been very fortunate that this has only happened to me on a few occasions and not for many years. When it happened the last time, I had known for some time that there was some staff dissension. The company has grown rapidly and my management team has expanded to the point that not everyone fits in, particularly those who started when the business was a small and intimate corporation.

It can be devastating when your long-term business relationship is suddenly and permanently severed. Even if you have a premonition, you really don’t see it coming. As a principal you might think, “They are probably better off with me than without me, so I can’t believe they would actually leave.”

In reality, principals should prepare for the eventuality of an associate leaving. If and when an associate feels able to do so, he or she will go his or her own way. Knowing this might help in your planning process, but it does not lessen the drama and stress that follows such a departure. What’s also deflating and disruptive is the confusion that results for patients.

For the most part, patients don’t like change when it comes to their caregivers. Principals are often left with major knowledge gaps and ignorance of patient’s preferences, established procedures, financial considerations and so on. And last but not least, patient confidentiality issues and company security measures may be at risk. More stress and consternation.

The truth is people will do what they think is best for themselves and their families, and I completely respect that because my own family has been protecting its interests for many years.

It’s the sudden impact of somebody simply saying, “I’m leaving.” That’s hard to deal with-no matter how many times it happens. We’ve all been through it in dating relationships, marriage relationships, friendships or business relationships. And when you don’t see it coming is when it hurts the most.

I’ve reflected on it in many different ways–anger, relief and most of all sadness. I still don’t understand where the relationship failed so badly. Remember, this is a business relationship. This is nothing like being in love with someone. Yet, I have to ponder, what could I have done better? Should I have been more attentive? Maybe I didn’t listen well enough? What did I do wrong? How did I upset this person to the point of deciding to leave?

Self-reflection is a large part of this experience, but when you’re a principal/owner and a long-term associate leaves, I can tell you one thing…

It hurts.

TIMOTHY BROWN

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

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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Men Are from Mars, Women Are from Venus

Buying-Selling A Practice, Finance|Wealth, Practice

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I must admit that when this book first came out in the early nineties, I never read it. I still have not read the book to this day. The premise of the book was that most common relationship problems between men and women are a result of fundamental psychological differences between the sexes. Of course, there are differences. Men and women approach things completely different which is probably the reason I have never had the inclination to pick it up. Why read about the obvious??

Then I began thinking about practice values. All successful practitioners take the time to calculate the value of their clinic in the market. By determining this value, they know how much this specific asset is worth. Even if one is not ready to sell, having the valuation completed allows an owner to expand, grow and further increase the value of the practice.

Whenever I speak or write about the factors that affect value, I always make reference to the financials, the value of the actual assets in the clinic, whether the associates and staff are on contracts, the lease, and other factors. Whether you are male or female, as an owner these factors are the same and they definitely impact value.

However, when discussing values specifically with female owners it is a different conversation than with male owners. For instance, more women than men are actually surprised with the final value because the practice ends up being valued higher than what they originally thought. As women, I think we tend to underestimate ourselves and as such, the value in the business itself is not seen for what it really is.

Practice values for women will definitely be affected by age and stage. For example, if a valuation is being done during or after a maternity leave, financials are going to be affected. When we calculate value, we use a three-year weighted average. During this specific stage of life, because a woman will have worked less this means revenue is less yet expenses like rent or staff must still be paid, which means less profit or cash flow. What about when children are young and as a practice owner, practice hours must be juggled? I remember when my daughter was first born until about age 5 my time and earning capacity for my career was reduced because of the stage of life we were in. Remember, cashflow is a huge factor that affects value. Not to generalize but the birth of a child has less affect on the practice’s value when the owner is male. Another stage that potentially affects the value of a female owner is someone who is in her mid to late 50’s and is trying to manage aging parents? Again, these personal situations can affect the performance of the clinic for obvious reasons. I do wish to note that I am not saying managing elderly parents is exclusive to women, men deal with this as well. I am simply making a generalization.

The practice is a significant asset and also another child. What is key for female owners is that women must ask and know the value of their businesses. There will come a time when the decision to sell will be made. Hopefully, it will be part of the overall investment and retirement strategy. Unfortunately, there are many statistics confirming that women do not invest as much as men do.

When female owners do decide to have a practice value completed, please remember one thing. If any of these stages I have referenced required your attention, please do not be apologetic for where your value ends up. If you did take time off to raise a family or manage a personal situation, do not regret having a business that “could” be producing more. An appraisal will definitely cause any owner to reflect on their management and success to date. However, success is not only defined as the number of patients you saw or the level of revenue you achieved. Success is not one dimensional. The definition of success differs from one person to another. Taking care of one’s family, making money and maintaining your own sanity throughout are also clear signs of overall success.

The last point I wish to make, regardless of whether you are a man or woman is that you must be in charge of your finances and future. A huge step to accomplishing this is knowing the value of your practice.

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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Plan Ahead—You Never Know

Finance|Wealth, Practice, Resources

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Some of our clients are seniors and with every passing year we are saddened to hear of the illness and sometimes the loss of these highly valued clients and oftentimes they are personal friends. One such client comes to mind. He was still practicing, but reported having fatigue that day. His staff insisted that he go home and rest thinking he had a severe case of the flu. Unable to drive, his son took him home where he slept through the night. When he woke up he was still not well and his family took him to the hospital. He died that same day.

He was diagnosed with a severe case of cancer (stage IV leukemia) and there were no pre-indications that he or his family was aware of. If he did know, he did not tell anybody. If he did not know, it is probably because he was only 53 years of age, very fit, exercised regularly, led a healthy lifestyle and as a result had not seen his physician in some time.

More factors regarding his illness were later found but the bottom line is he was treating patients a few days before he died. As business advisors and brokers, we encourage our clients to examine their Will, update it regularly and designate a trusted family/friend/advisor to know where it is kept.

Next, we advise our clients to have an emergency plan for the business itself. We tell them that a Will looks after your assets after your death and distributes those assets as you have directed. In many cases, this process can take two or more months to be properly enacted by your executors. What happens to your practice/business tomorrow if you suddenly die today?

Do you have a specific individual who will take the responsibility of caring for and controlling the practice to ensure that it continues to operate? This means that patients are seen, staff, landlords, and suppliers are paid to keep the business running in a vibrant fashion. By doing so you prevent your practice from plummeting in value in your absence as the key producer?

Do you have a specific health care professional (HCP) or a group of HCPs who should be called upon to help you, your family and business advisors if an emergency arises to keep the business operating in an orderly manner?

Often, in the absence of any instruction of this nature, the staff or the family members—while in a state of shock or sadness—will shut down the practice and cancel patients’ appointments. They will have no idea when or how to re-open. Should something be said in the newspaper? Should there be an announcement to the patients? How is your practice to be run without you there to guide them?

Understandably, your practice will close for two or three days to allow family/friends/colleagues to grieve and to attend your funeral. BUT soon—it is business-as-usual for the sake of the business! It must be maintained and its value preserved. Subsequently that value will inure to your estate or to the executors in full form and fashion, as opposed to being closed and your practice starts to fail.

Why would you want to leave an asset in a state of rapid decline when all you need to do is have a Will for your business and/or an emergency plan that gives your family/executors/advisors specific instructions?

Here are the instructions you should have in place:
1. A locum be added into the business as quickly as possible.
2. A list of HCP locum names with phone numbers is available to call. Most brokers have locums at the ready for this purpose. An office manager or receptionist can be designated to do this task at this time. It does not have to be done by a lawyer or a family member.
3. The practice should be appraised immediately or if an appraisal is on file, that appraisal should be updated. Your accountant and your lawyer should have a copy of your emergency plan. Again, provide the names and contact information of the individuals designated to perform these tasks.

Delay of any of these steps reduces the operating value of your business. We (as individual advisers/brokers) would not want to leave our business in that condition. Most of us have children and grandchildren and others
to whom we wish to leave a legacy. We never want to leave a negative
declining asset behind.

Additional steps can be taken depending on the unique circumstances of
your practice/business. Consider consulting with a professional practice appraiser/broker to put an emergency plan and business Will in place. By doing so, you will preserve hundreds of thousands of dollars for your family, your church, and your charity.

TIMOTHY BROWN

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

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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Eyes Wide Open

Buying-Selling A Practice, Practice, Resources

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Two pressing issues have surfaced in recent discussions with clients—and they’re both very important and closely related. It’s like the two sides of a coin. Heads deals with impossible promises while the flip side, tails, involves managing expectations.

IMPOSSIBLE PROMISES

A client I’ve known for years called to say that he had been approached by a corporate entity to buy his practice. Later, he called me again for a second opinion to make sure he was doing the right thing. The investor buyer had promised to pay the highest price for the practice compared to any other private-sale offers or open-market sales brokered by any firm.

So, is this a legitimate and fully defensible claim? The first and key thing to remember is that if a practice does not go to open market, the price paid by the buyer will be the highest offer that the seller receives, simply because the seller is not accepting other offers. In that respect, this purchaser made a correct claim.

On the other hand, the buyer also suggested that his/her offer would be the highest of any offer—but if a practice does not go to open market, then this is an absurd claim because it cannot be validated. Why? The reason is also simple: if no other buyers are given the opportunity to make an offer, how can anyone prove that the first offer was the best? Impossible promise!

This type of behaviour is prevalent because there is a limited supply of good practices for sale. Corporate investors are very flexible and have a dedicated senior management team soliciting and focusing on practice acquisition. On the other hand, in the traditional health care practice marketplace, the buyers are mostly professionals who are raising families and practicing in various locations. Typically they do not have the time or resources to invest when searching for a practice to buy. These buyers rely upon brokers to introduce them to practice sales opportunities.

MANAGING EXPECTATIONS

On the flip side of today’s eye care practice sales market, it’s about juggling sellers’ expectations. In the normal course of appraising and selling a practice, many parties are consulted. Early on in the process, the seller should seek legal and accounting advice on sale structure and allocation of sale price as shares or assets. In today’s multilayered corporate structuring, we are still finding old management companies, technical service corporations and multiple health care professional corporations, as well as sole proprietorships. Each of these scenarios has different and unique tax implications and, in some cases, complex legal implications.

Vendors often tell us that they’ve consulted with their advisors, so we proceed to the market (and we often consult with advisors at this early stage). However, as we near the completion of an offer to purchase or closing date of a practice sale, sometimes advisors will realize that there may be some last-minute opportunities to affect tax savings for the benefit of the vendor. In many instances, there is no harm to the buyer and, in some cases, there’s actually a significant benefit to the buyer. But the serious dilemma with bringing these matters to light in the final days and hours, is that advisors on both sides start seeking to re-negotiate a contract or even re-enter a conditional period—perhaps when all other conditions have already been removed—and this puts a transaction in serious jeopardy.

Our advice to both buyers and sellers of any type of health care practice is to begin consultations and preparations of tax and legal matters a year in advance of a possible sale and, at the very least, prior to the preparation of the appraisal of the practice. Any delay in making this investigation or process happen with your tax and legal advisors will likely cause significant delays, high fees and could jeopardize the sale of your practice. In short, poorly managed expectations.

IT TAKES TWO SIDES

It is important to not be misguided by an impossible claim to sell a practice at the highest possible price. Be levelheaded. Adopt a well-conceived, balanced and careful plan when you’re in the process of buying or selling a practice. And save that coin for your pocket.

TIMOTHY BROWN

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

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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A Unique Perspective on Practice Appraisal

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

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I was reminded of an article I wrote a few years ago about a unique situation. Our company was engaged to appraise the practice of an optometrist who was preparing for her retirement. While I was meeting with her, I mentioned that I needed a new pair eyeglasses and I also wanted to purchase a pair of prescription sunglasses.

I performed the appraisal when the practice was closed—which is the usual and customary process for all business appraisers—and while meeting with the owner I asked for her permission to book an appointment to attend her practice as a new patient for an examination and new glasses. She agreed.

Needless to say, when I arrived for my appointment during normal business hours the staff did not know who I was and that we had performed an appraisal for this practitioner. I had a wonderful experience as both a new patient and a purchaser of two pairs of glasses.

Then as now, it occurred to me that as a professional practice appraiser and broker— seldom do I meet the staff—nor do I attend the practice during regular operating hours for obvious, confidential reasons. I realized how much I had learned about the wonderful office environment that this owner had built and the incredible staff that she employed. I wish, as a broker, that my team could have this experience with every practice they visit.

From this visit, I had obtained two points of view—one as an appraiser/broker—the other as a patient. This was and still is an extremely rare circumstance. In completing the appraisal, it was now impossible for me to ignore the excellent service I had received as a patient. In addition, the staff provided me with the following:

• An email containing a simple, online patient survey within 24 hours of my appointment, which I completed,
• A second email thanking me for completing the survey—it arrived within minutes of the survey completion process,
• A third email asking whether I would like to be contacted in the future by email, telephone or by text message for upcoming appointments—I found this very useful as I prefer text messaging.

What incredible patient communications! All of this had transpired within 24 hours of my new patient examination. Needless to say, this remains one of the best patient experiences I have ever had in a professional health care practice.

My dilemma at the time was how do I ignore my experience as a patient when I finalized the appraisal as a professional? Frankly, I could not and did not. This practice was exceptional. I was thoroughly impressed—if all appraisers and brokers could have the new patient experience in their client’s practices they would know much more about how a practice operates and what the patient experience is like.

Essentially, I was an ‘undercover patient’ (much like retailers employ undercover/false shoppers to gauge customer service) and as such learned a great deal more than the traditional, after hours appraisal process.

My company to this day is still trying to decide how or even if it is practical to use ‘undercover patients’ to learn more about our clients’ practices in order to prepare a more empirical practice appraisal. Obviously, we cannot simply act as an undercover patient each and every time we appraise a practice. But I still think about it—maybe as a practice owner you should as well.

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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Empathetic Goodwill

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

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In the usual course of our business we are asked to assist when a sudden disability or death of a health care practitioner/owner has occurred.

The initial reaction and concern from the disabled practitioner, staff, family or advisors is that the practice is going to suffer without the presence of the principal owner and that patients will seek other providers. Most conclude that a business disaster is imminent. Much to their surprise, history proves them all to be incorrect.

Our first advice is to install a professional locum practitioner to attend to the patient needs. This is critical and not to be ignored. As difficult as it may be to accept this advice, it has to be business as usual for the preservation of the practice to assure the staff that their jobs are secure and that all practice financial obligations can be met. A short, temporary closure of 3 to 5 days is understandable and expected but after that the practice must be open for regular business hours at all costs!

And then a very unusual phenomenon begins to reveal itself.

Empathetic goodwill is our descriptor to explain why people go out of their way to show support for the business and the business owner.

Once the initial shock of the tragedy or the situation is absorbed, we often find that the staff begins to show incredible support for the business and they actually go above and beyond the call of duty. This is a natural empathetic response that happens after people adjust to the new norm. A norm where you, the principal, are no longer present.

We also learn that patients may show extra enthusiasm for helping your practice through the tribulations and they respond by honoring appointments.

Once some time has passed, usually about a month, we see that the practice with the support of the staff, the loyalty of the patients, and the aid of a professional locum, is actually doing as well and on some occasions even better than it did under the guidance of the previous owner. Yes, better than when you, the principal, were present!

This phenomenon can be further explained by the fact that people genuinely care and want to help those in need.

The summation of this discussion and this article is to suggest that if something terrible should happen to a business owner, you will be shocked, amazed, and surprised at how their staff’s loyalty and their patients’ support impacts the business in an incredible way. Your practice remains vibrant, productive, and is able to meet its debt and overhead obligations. The long-term result of taking the actions outlined here is that when it becomes necessary to sell the practice, it will have held its true monetary value.

TIMOTHY BROWN

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

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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Choose One – Thou Shalt Not Serve Two Masters

Buying-Selling A Practice, Practice

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A client called me the other day to say that he was approached by one of my competitors professing to have a very serious buyer for his practice. The broker went on to suggest that the practice did not have to be advertised on the open market nor should it go through the usual procedure of multiple buyers competing for ownership of the practice. The client was at first enticed by this proposition and realized that he may be able to negotiate a lower commission with the broker if they had a willing buyer waiting in the wings.

Then the client asked me, “Do you think this broker will get me the best price for my practice if they are only working with one buyer?” In my experience, the open market has always proven to yield more than one interested purchaser in most instances and generally speaking the open market silent sealed bid competition will always yield a higher price.

Of course, this is impossible to prove if multiple offers are not presented—how could any broker claim that a buyer is submitting the highest price, given that only one buyer is being negotiated with?

The client then further asked me, “Who do you think this broker is working for, Tim, when they are bringing me this one special buyer?” It brought to mind the antiquated concept of dual agency and multiple representations, whereby a broker works for both buyer and seller. In most provinces, this is still permitted, although I have always argued that it is an absurd concept because nobody can serve two masters.

I encouraged the client to contact the broker and ask him or her a straightforward question. Is he or she being paid a finder’s fee or commission by the purchaser in order to locate practices that the purchaser wants to buy? At the time of writing this article, neither the client nor I know the answer to this question.

In the past, purchasers have approached me and offered to pay me a direct commission above the sale price of the practice if I promised to bring forth highly desirable listings for their exclusive review before taking the practice to market. I have always refused. I do not, nor will not, serve two masters.

If I was selling my house and an agent approached me and said they have a special buyer and that the normal routine of placing a sign on the lawn and conducting an open house is not needed because this buyer is motivated, I would be suspicious that this realtor may be working with a preferred purchaser on a secret or undisclosed commission agreement. According to the real estate legislation that I am aware of—doing so is contrary to the Code of Ethics and if a broker or realtor is acting for a buyer and not telling the seller they are being paid by that buyer, they are breaching one of their fiduciary duties.

Serving two masters will place anyone in a very difficult and compromising situation. Who do you disclose all relevant facts to? If a buyer says he or she will pay more, do you have to tell the seller? If you are also working for the seller and he or she says they will accept less, do you have to tell the buyer?

I never put myself in that position, or any of the sales representatives of my company. And the province of British Columbia may agree with me; recently BC legislators proposed that the type of dual agency discussed here should be regulated. Regardless of any legislative outcome, I caution possible sellers, to be very wary of anyone who appears to be serving two masters. Instead, pick one or the other.

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.

TIMOTHY BROWN

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

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