The Must Knows About Buying & Selling a Chiropractic Practice

Host: Mike Whitmer, Vice President of Corporate Relations at NCMIC.
Guest: Crystal Misenheimer, Lead Broker at Progressive Practice Sales.
Key Discussion Points:
Buying a Practice:
Time Frame: It takes about 5 to 6 months to buy a practice, including finding, visiting, negotiating, and arranging financing.
Necessities: An attorney for legal aspects and a broker for sale structuring and ensuring smooth practice transfer.
Working Capital: Essential for unexpected expenses and initial cash flow management.
Selling a Practice:
Time Frame: Average time to sell a practice is about 8 months.
Optimizing Sale: Plan about three years in advance, set correct pricing, prepare detailed data and documentation.
Challenges: Incorrect pricing and lack of preparation are common issues leading to unsold practices.
Valuation of Practices:
Based on Discretionary Earnings (DE) and a market-determined multiple.
DE calculation considers transferable profit, non-transferable income, and necessary adjustments.
Associate Buy-In/Out:
Requires clear, early expectations and legal agreements.
Involves numerous factors like valuation, transition period, and responsibilities.
Investor Groups and Franchises:
Investor groups offer higher multiples but require continued involvement in practice growth.
Franchises and corporate chains are influencing the market, especially regarding the chiropractic labor force.
Advice on Unique Selling Situations:
Selling to family members, multidisciplinary practices, and selling only the patient list.
Emphasizes the importance of due diligence and proper valuation in all cases.
Broker’s Role and Compensation:
Brokers typically paid by sellers, commission-based.
Importance of choosing a knowledgeable broker familiar with chiropractic practice sales.
Impact of COVID-19:
Affected the financial assessment of practices.
Practices that haven't rebounded post-COVID might face valuation challenges.
The conversation offered comprehensive insights into the complexities of buying and selling chiropractic practices, emphasizing the importance of proper planning, valuation, and professional guidance. It highlighted the evolving dynamics in the chiropractic market, including the role of investors and franchises, and provided practical advice for various selling scenarios.
Keywords: Chiropractic, buy a practice, sell a practice, practice valuation, associate buyout, podcast, NCMIC, Crystal Misenheimer, Progressive Practice Sales