Interested in selling your practice to Nystrom & Associates?
Nystrom & Associates is proud to have partnerships with premier mental health, and substance abuse centers across the country. If you are the owner of solo practice, group practice or treatment facility, NAL would like to learn more about you, the community you serve, your clinical philosophy and about your staff to see if it might be a good fit for Nystrom & Associates to invest in you and provide operational support so you can be freed to do the work you love most.
We welcome having an introductory conversation to answer any questions and see if Nystrom & Associates might be a good fit for you. Please contact us at email@example.com.
FAQs About Selling a Counseling Center or Private Practice
- To reduce liability and responsibility
- To cash out and lower/eliminate risks
- To be freed to pursue other opportunities
- Retirement or to have more work/life balance
- Businesses are valued according to their EBITDA or “yearly profit.” Your accountant or a CPA will be able to calculate this after reviewing your tax returns.
- Businesses often sell for anywhere from 1 to 10 times EBITDA, with mental health practices averaging more like 1-3 times EBITDA and the rapidly growing tech companies being the type that can sell for 10 times EBITDA.
- There are many other factors which affect value including:
- How much salary the owner was drawing and how that affects profits
- Quality of staff, staff retention, morale, and if they will stay if the owner sells
- What’s the value without the owner’s contributions if they plan to leave after the sale
- If there are good leases with low rent and multiple years terms
- Strength of the referral stream and if referrals are coming from multiple channels
- The number of contracts and the contracted rates with insurance companies, EAPs, and other referral streams
- If the branding goes beyond the owner’s name as a recognized entity in the community
- If the business is growing or declining
- Compliance with professional, ethical and legal standards of practice
- If there are owned assets such as equipment or commercial real estate
- Web presence, Google rankings, and online reviews
- Some owners sell the practice to their staff. Generally, this is a lower-priced sale.
- Venture Capitalists will often buy behavioral healthcare practices at a lower rate. They often work with people who are moving into retirement and average around 1x EBITDA.
- Private Equity firms are sometimes interested in mental health practices, just as they have been buying and corporatizing dental, chiropractic, and physician practices in recent years. There is a concern that these professionals may miss the mission-driven and relational components of counseling practice and that quality of care might be compromised.
- Other larger practices, hospitals, and EAPs may be interested in buying practices but the brand would be swallowed up by a larger brand.
- Nystrom & Associates leaders are experts in behavioral healthcare, own and operate practices throughout the country who maintain their own branding, and are focused on clinical excellence and quality of care.
- When your business is at a high point
- When you are starting to burn out
- When you are ready for a change in your life
Your role is negotiable. There are many ways to make a deal and people can choose to leave completely or they can choose to:
- Stay on as a full or part-time employee or consultant
- Work as a full or part-time employee or consultant for the parent company
- Keep in mind that you will likely be asked to stay in your current role for a transitional period anywhere from one month to one year and you will likely be asked to sign a non-compete agreement (which is standard business protocol)
It’s important to have a team of advisors including:
- A good accountant or CPA who will explain things like closing costs and taxes related to the sale.
- A corporate attorney, possibly one who specializes in mergers and acquisitions in smaller businesses in the service industry.
- A business broker can be very helpful throughout the process, although they do receive anywhere from 5-10% of the sale price.
- It’s wise to keep your interest in selling close to the vest so that staff don’t get nervous or competitors don’t take advantage. You may choose to tell your leadership team in order to have their support.
- Many brokers will say that on average, it takes a year to sell a business.
- It’s possible to sell your business in 1-3 months if you choose a simpler process, like selling without a broker.
- The sale is a process that starts with a Letter of Intent (LOI) which includes the offered sale price. Once the LOI is signed, the seller is under “exclusivity” and can not talk with other prospective buyers or anybody else about the transaction. This phase is similar to being “under contract” when selling a home.
- The next phase is a period called “due diligence.” Due diligence is a process where the prospective buyer verifies that all is as presented. The length of this depends on the complexity and organization of your business. Depending on the findings during this phase of discovery, the initial offering price may be renegotiated. This phase is akin to the inspection process of selling a home.
- The final phase is “attorney review”. This is when the purchase agreement and any other applicable documents such as employment agreements, consulting contracts, earn-out plans, non-compete clauses, or shareholders agreements are signed.
- From beginning to end, this process can take anywhere from a month to several months depending on the complexity of the transaction.