26 February 2018 | Clinic Owners and Practice Managers | 2 minutes read
Selling your practice? Watch out for fake offers
The GP practice market is hotter than ever but some of the potential buyers may be presenting fake offers which can result in a great deal of distress and disappointment for sellers.
While there are many potential pitfalls that can occur as part of the sale process, we are currently seeing a lot of interest from buyers who rely on private equity funding from overseas to allow them to buy up groups of practices.
You can avoid making expensive mistakes if you avoid some of the common traps that may occur when you receive what looks like a good offer:
Above market prices: If you are getting offers in excess of 5 times your normalised profit, it might be that a buyer is just trying to get a sales transaction completed so that they can go to private equity funders with a portfolio of potential practices in order to get funding. If that fails, the offer will be withdrawn due to lack of funding.
Very flexible terms: If your offer gives you more flexibility and better terms than most other offers, it may be that the buyer does not understand what makes General Practice successful and how to ensure the ongoing success of the clinic. Experienced and serious buyers will have ‘tighter’ terms because they know what matters in the future.
Inexperienced buyers: If you are approached by a buyer who does not have previous experience in acquiring and running GP practices, they may not be buying for the right reasons. Many investors know that health is a growth sector and assume that they can run a GP clinic because they have been successful in other business ventures. Those of us in the industry know that primary health care is uniquely different and surprisingly complex. If you or your staff are planning to remain in the business, you want to make sure that you will be cared for
There are many potential buyers and far fewer potential sellers, so if you are planning to sell your practice, make sure you get good advice to help you make the right decision. We work with GP practices across Australia every day and gain unique insights into the current trends and challenges.