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Lessons from a former practice owner
Written by Eric Krell, Regional Vice President
Some of my friends call me a serial entrepreneur. My wife calls me crazy. If you are reading this article, you most likely fall into one or both categories. I have owned a bicycle shop and started three non-profits (one of which was a soccer club). However, my greatest, most-rewarding business venture was starting a private physical therapy practice in 2003. To open it, I mortgaged my house to come up with enough capital to get a loan. I was all in, with my wife and a new baby on the way.
I worked my tail off. I would answer the phone, check benefits, take copays and treat patients all day. I was the C-suite of the business. I wore every hat and wore them well. Long hours led to missed family events and took a toll on relationships. I was focused on one goal: grow the business. My mantra was failure is not an option, and I would say it to myself almost daily.
Like most entrepreneurs, I get a charge out of creating new ideas and processes around a business. So when my first practice started growing, it was time to open another one, and then another, and another. In 15 years, I opened 12 clinics, had three children and two dogs. Throw in a recession in 2008, and I ended up with eight clinics to take to the market.
In 2015, I sold majority ownership and partnered with exactly the right group for me. In part two, I’ll discuss how to pick the right partner.
First, it was not a decision that was made over coffee and donuts one morning.
Selling my practice played out over several months of critically assessing the business and personal and professional goals.
A combination of these factors often plays into the decision to sell.
This was the case with my business. I had to stay lean and mean and had multiple people wearing many hats. Oh, and by the way, I was still treating patients.
Cash is king and you don’t have enough.
This is what I did. The market in my state was heating up. I was suddenly getting calls from private equity groups and brokers asking whether I was considering selling. I’ll be honest, I hadn’t thought about it that much until I started getting all those calls. I have heard of business owners not ready or resistant to sell when the market is prime and losing everything or getting next to nothing for their business.
As a business owner in healthcare, many things, including reimbursements, are out of your control. You have to adapt to a moving target constantly.
Trust me, it happens. You have lost the spark and excitement. If you are in this mental and physical state too long and do not look to sell or transition control, your business will suffer, negatively affecting a potential sale.
Business ownership is not easy and it can be stressful. When business is good, it is really good but when it is bad, it is really, really bad. I can recall many times starting out a week wondering how I was going to make payroll.
The bottom line is, selling your practice is a personal decision and should be well thought out. Practice owners who have an exit strategy tend to make better decisions and are better prepared to move on a deal should one present itself.
Whether a complete sale of your practice or retaining equity through a partnership, Upstream will help you decide the best path forward while ensuring the highest valuation for your practice.