As the year comes to a close, many of us start thinking about our future, and what plans can be put in place to ease up on work commitments.
When you own your own healthcare practice, the transition to retirement involves much more than personal planning – it requires strategic foresight to ensure the future success of your business and a smooth handover to its new owner.
Succession planning is a critical step in this process, and with the right preparation and expert guidance, you can maximise the value of your practice while setting yourself up for a comfortable retirement.
When should you start planning for retirement?
To ensure a seamless transition, it’s essential to start preparing at least 2-3 years before your intended retirement. This timeline allows for the careful organisation of financials, operational details, and legal considerations.
One of the first steps is to determine how you want to retire. Are you looking for a complete retirement, or would you prefer a gradual exit, potentially working part-time under the new owner? Understanding your personal goals will help shape your succession plan.
Additionally, it’s important to evaluate your practice’s physical setup. If you own the building, consider whether you want to sell it alongside the practice or lease it to the new owner. For those who rent, ensure your lease has at least five years remaining – this is critical when it comes to buyer confidence and financing approval.
Why is succession planning so important?
Succession planning isn’t just about handing over your practice; it’s about maximising your return and ensuring continuity of care for your patients. A well-thought-out succession plan helps:
- Maximise practice value: Proper preparation allows you to address any issues that might lower your practice’s valuation, such as outdated equipment or incomplete financial records.
- Minimise tax liability: With strategic tax planning, Capital Gains Tax and other liabilities can often be significantly reduced or even eliminated.
- Maintain discretion: Working with a professional broker ensures the sale process is handled confidentially, protecting your reputation and maintaining trust with your staff and patients.
What does strategic succession planning involve?
Succession planning involves more than simply outing your practice up for sale and finding a buyer. It’s a comprehensive process that includes:
- Forming an expert team: To ensure a successful transition to retirement, it’s essential to engage a specialist accountant, lawyer, and business broker to handle all of the financial, legal, and transactional aspects of the sale. Amalgam Advisors has a network of trusted advisors in each of these fields that we can recommend if you don’t have your own contacts.
- Practice valuation and due diligence: Going through a thorough practice valuation and due diligence process ensures that you can confidently place for a fair and competitive asking price on your practice.
- Financial and legal preparation: You will need to collate all necessary documentation, including financial statements, employee records, contracts, and operational reports before placing your practice up for sale, so buyers can review them with confidence.
- Practice optimisation: Addressing any operational or cosmetic issues that might deter buyers, such as outdated equipment or inefficient processes, will ensure you get the best price for your practice.
- Patient retention: Maintaining strong appointment numbers and high-quality patient care will help to preserve your practice’s value during the sale process.
How Amalgam Advisors can help
At Amalgam Advisors, we specialise in guiding healthcare practice owners through every stage of their career, from buying their first practice to retirement, and everything in between.
From minimising tax liabilities to organising your financial data and connecting you with trusted brokers and legal professionals, we can ensure your journey to retirement is smooth and stress-free. Retirement is one of the most significant transitions in your career – let Amalgam Advisors help you make it a success.
