Selling a Physician's Practice: Four Costly Mistakes to Avoid

Physicians can lose substantial value when selling a private practice without sufficient preparation. A successful sale requires early planning, qualified guidance, realistic pricing, and careful buyer selection.

1. Waiting too long to plan. Preparing and completing a practice sale takes considerable time, so trying to exit within 12 months can sharply reduce options and negotiating power. Early succession planning—especially for solo practices—helps position the incoming physician for success, reassures buyers, and can support a higher sale price. Prudent sellers start the sales process at least three years before their planned exit date.

2. Choosing the wrong adviser.  Selling a medical practice is not like selling a house.  It takes a business broker with healthcare-specific industry experience.  The healthcare intermediary knows the selling and due diligence process to get your transactions closed quickly.  He has industry contacts such as transaction attorneys, bankers, and tax advisors who can help you navigate the selling process.  Business brokers who sell restaurants do not know the healthcare industry. Nor do general business accountants.  And no, the attorney who handled your house sale cannot efficiently close selling a practice.

3. Setting the wrong price. An unrealistic asking price can stall a sale, particularly if profits do not support the valuation. Pricing should reflect the specialty, comparable practices, the economy, local market conditions, and the practice’s strongest opportunities. Owners should also avoid underpricing because of burnout, illness, urgency, or poor advice; research and professional guidance are essential.

4. Picking the wrong buyer. The first or highest offer is not always the best one. Deals with little money paid up front and long payment terms expose the seller if the new owner struggles. Evaluate whether a buyer has the clinical fit, business judgment, leadership ability, and capacity to connect with patients and referral sources. Whenever possible, secure most of the sale proceeds up front and limit funds held in escrow.

Bottom line. Thorough preparation improves both price and transaction quality. Develop a clear reason for selling, a credible transition strategy, and a process for evaluating advisers, valuations, deal terms, and buyers. The more confidently these issues are addressed, the less uncertainty a prospective buyer will have.