Selling any small business is an emotional and traumatic experience.
Selling a professional practice is even more complex and painful.
The departing doctor or dentist not only has to say goodbye to his or her livelihood, but to patients, colleagues and friends.
But with careful planning, an expert appraisal and an experienced broker, a successful sale is possible. And when timed right, the sale brings financial and personal freedom, according to professionals who have sold their practices.
"The sale opened up a whole new life of freedom for me," said Dr. Sandra Beth Katz, an ophthalmologist who spent nine years treating patients in her renovated Victorian home in Augusta, Me.
Swamped with patients, Dr. Katz recruited a partner from Wisconsin. He left after three months, complaining that all the patients still wanted to be treated by Dr. Katz. When he quit, Dr. Katz, who is single and loves to sail, decided to sell the practice and free herself to travel.
"I tried to sell it myself, which was an adventure," Dr. Katz said. "I advertised, I hired an attorney and hired an accountant to evaluate the practice. Three people were interested but they all got cold feet."
Frustrated, Dr. Katz retained Madeleine Pelner Cosman, founder Medical Equity Inc. in Tenafly, N.J. After evaluating the practice, Ms. Cosman tripled the asking price and within in a few months, found an ophthalmologist willing to pay the full amount.
A medical law specialist, medical school administrator and author, Ms. Cosman has sold scores of practices for doctors and lawyers in the past 10 years. She didn't plan to become a `D practice broker, but fell into it when an ailing friend asked her to help sell his medical practice.
"I naively thought I would hire an expert to help me, but found there was none," Ms. Cosman said.
Even in these rough economic times, a good practice can sell for 100 percent of its gross revenues, Ms. Cosman said.
A key factor in the equation is the professional's goodwill, which is often worth more than the building and equipment.
"Goodwill is not popularity," Ms. Cosman said. "Goodwill is invisible and intangible, but it is real, and one person's goodwill can, in fact, be transferred to another."
While medical professionals are prohibited from selling patient records, they can sell access to the records and a patient list.
Although there is no set rule, most medical practice brokers receive a commission equal to 10 percent of the sales price. Financing is also a bit tougher in the current economic climate, according to Dean George, a broker with Professional Practice Sales based in Tustin, Calif., who has been selling dental practices for 25 years.
He said more and more bankers are requiring secondary sources of repayment or additional collateral. His buyers are also relying more on U.S. Small Business Administration loan guarantees to help finance their purchases.
Depending on where you are, it can take six months to a year to complete a transaction. And no matter how much you want out, finding the right person to fill your professional shoes can send even the most stable person into an emotional tailspin.
According to Ms. Cosman and other professional practice brokers, doctors, dentists and attorneys sell out myriad reasons. Doctors often tire of threats of malpractice suits, government regulations and insurance company limits on the fees they can charge. Others are just burned out, ready to retire or want to pass along the practice to a younger partner.
"Physicians I deal with occasionally behave in bizarre ways," said Ms. Cosman, who frequently mediates heated discussions between buyers and sellers. "The odd behavior appears to be associated with finance or law, but is in fact emotional."
Mr. George says the emotionalism is earned. "For the dentist who has been there a long time, the patients become like a big, extended family," he said.
He remembers one older orthodontist who had a very hard time when he had to sign the final sales contract. "I kept pushing it across the table for him to sign and he kept pushing it back to me," George said.
But Ms. Cosman, who sees her role as liberator for those needing a new life, advises professionals who are thinking about closing up shop to look at it in a positive light.
"The decision to sell your practice is a step toward liberty -- it's not an admission of age or distress."