Health Pro Realty Blog

Welcome to our blog! Here you will find the latest updates and news from the team at Health-Pro Realty Group. Check back often to learn more about the initiatives we’re taking to help medical practitioners nationwide find the perfect place to establish their business.

Contact us for more Health-Pro Realty Group news. We proudly serve medical professionals nationwide.

I want to sell my medical or dental practice, Is now a good time?

Selling Medical and Dental Practices to Corporate Buyers

Dentists and doctors are not always sure when the right time to think about transitioning their medical or dental practice. Years ago, when a professional got close to retirement age, they would market their office for sale or bring in a partner to take over their business. But now more than ever the buyers of a medical or dental practice is going to be a corporation. The margins have changed to the point where it is difficult for an individual doctor or dentist to buy a practice. Expenses keep going up while private insurance and government reimbursements continue to decline making it very difficult to generate a profit from a medical or dental office. Corporate medical and dental is a slightly different scenario.

Often time’s corporate doctors and dentists are private equity groups who do not need to finance their purchase. When a practice does not have debt the yields are calculated differently then when they are financed. Corporate medical and dental companies see the value of the founding doctor or dentist staying with the business.  Years ago corporate buyers wanted the founding doctor or dentist to leave so they could implement their goals and objectives. Now corporate buyers want the doctor or dentist to stay around after the acquisition of the practice. Sometimes they even want them to stay on 10 years or more.

These corporate buyers can offer the dentist or doctor a sum of money up front, and a salary while they work and an equity stake in the DSO or MSO when the doctor wants to retire. Depending on the situation, a sale to a corporation may allow for a win- win for all parties concerned.  Please feel free to reach out to HPRG for a free consultation on your situation. cfeitel@hprgrealty.com, 301 . 571.9333, HPRGrealty.com.

Timing is Everything: When to Sell Your Medical or Dental Practice

HPRG - Medical Office Space

 

Traditional wisdom says to work your whole life and sell your business when you are ready to retire. Although, many buyers of dental offices and medical offices are corporations or private equity firms. These firms have a different model than an individual buyer. Corporations place a huge emphasis on the current dentist or doctor. Ideally they want that individual to stay on as long as possible. Moreover, the office has the highest value when the practice is peaking in value. In other words, it might make sense to sell your office much earlier than you thought in order to get the most value in return for selling your practice.

Medical and Dental Practice Business Value

In many cases you can get 70-80% of the value of the business, keep working up to 10 more years and draw a hefty salary and not have to worry about the mundane headaches of running the business. Then when you are ready, cash out the remaining 20-30% of value. All of the economic experts are predicting a rise in capital gains taxes which could be significant. So getting 70-80% of the value now while taxes are lower and continuing to work without pressure may be something to consider! Not every office will meet the criteria of a corporate or private equity buyer but the right broker knows how to determine if you are a candidate for this type of sale. Size, location and type of medical practice all factor in to this determination. Even if you are remotely considering selling it makes sense to receive  a “free” consultation to see where you stand. 

Feel free to reach out the Charles Feitel at HPRG at 301 365 6940 or email him at cfeitel@hprgrealty.com.   WWW.hprgrealty.com

HPRG Expands Dental & Medical Transition & Realty Capabilities

HPRG: Health-Pro Realty Group, Logo

BETHESDA, Md. – April 27, 2021 – PRLog — HRPG (Health-Pro Realty Group) has expanded its team of commercial agents and transition experts, offering additional support to clients in the medical and dental fields, as well as commercial property owners and landlords.

With decades of experience in medical and dental practice real estate, HPRG has developed specialized expertise that helps local physicians and dentists find the right spaces for their practices as well as complete the sale or purchase of a practice. With offices in Bethesda, Maryland, and McLean, Virginia, HPRG has rapidly grown in the DMV area over the last year, adding new agents and helping close a number of major deals. Currently, HPRG is the largest healthcare brokerage firm in the DMV.

“We are excited about the future of HRPG,” HPRG President Charles Feitel said, “but we are even more excited to assist local physicians and dentists with achieving their dreams of finding the right space, owning their own practice, or selling their practice as they transition into retirement.”

When it comes to helping physicians and dentists sell their practice or purchase an existing practice, HPRG offers a unique approach that has proven successful for many satisfied clients. HPRG provides specialized expertise from its team members in the three most important aspects of the practice transition process: valuation, operations, and real estate. This approach helps practice owners be certain they are getting accurate, unbiased information as they move forward, and can make informed decisions based on the market.

Of the approximately 200,000 practicing dentists in the U.S., approximately 88% are practice owners, either as solo practitioners or partners, according to the American Dental Association. For these practice owners, the sale of their practice may be one of the most important moments in their entire professional career.  Knowing when to sell their practice is as valuable as how to sell their practice.

“Practice owners can count on unbiased, expert advice from their team in each of these pillars throughout the transition,” Feitel said.

For commercial property owners and landlords, HPRG’s connections to the medical and dental fields can help place the ideal tenant.

“Many commercial property owners are looking to add medical and dental tenants to their mix of tenants, as we’ve seen retail decline over the last year. The overarching vision for HPRG’s team is to serve both practice owners and commercial property owners, and create a win-win,” Feitel said.

# # #

HPRG is the premier medical and dental real estate firm on the east coast. HPRG has assisted thousands of physicians, dentists, and landlords in all facets of medical and dental real estate and practice transition. If you would like more information about this topic, please contact Charles Feitel at 240.372.4867 or cfeitel@hprgrealty.com or visit https://www.hprgrealty.com/.

Contact
Charles Feitel, HPRG
***@hprgrealty.com

Information You Need to Sell Your Dental Office

North Bethesda Dental Office

Dental Office Space Sales Requirements

It’s time to start thinking about transitioning to the next phase of your life. It’s been a good run but now let’s consider other life options to pursue. Buyers have some similar things they like to see but every case is different. When attempting a sale of your dental office and/or practice making sure you keep solid records over the years will greatly help with the speed and trust or the sale.

At a bare minimum, you will need to have the following readily available:

  • Last three years tax returns and current year to date profit and loss statement
  • Number of active patients and new monthly patient growth
  • Payor mix if insurance based practice
  • Current AR
  • Employment contracts ( if you have them)
  • Procedures done in office
  • Patient calendar schedules
  • Building lease

This represents the bare minimum information you need to have. After the buyer signs an NDA this basic information can be shared. After the buyer visits the office, they will determine if they want to see additional materials. Every buyer wants to see different information and depending on the buyer certain information is more or less important. Be flexible as a seller and willing to accommodate their requirements. Keep in mind that you have more experience then them and may not see the need for what they want to see.

“Go with the flow” and cooperate so you can get your office sold at the highest price. Your broker will supervise the process and accommodate the buyer. After the basic information has been shared it is in the buyer’s court. I recommend you require a basic letter of intent before you share information over and above the basics. Have the buyer submit the LOI and spend money with an attorney to get them “vested” in the deal. If the terms are close , agree and have their lawyer submit a PSA ( Purchase and sale agreement). Now you can safely spend money with your attorney.

In sum, the sale of a business is a process. Obviously both parties will need to be flexible, but if you adhere to some basic steps, the process will progress in a smoother fashion. To learn more contact Charles Feitel at HPRG Transitions for a “free consultation”. 301.365 .6940 or cfeitel@hprgrealty.com. www.hprgrealty.com

Who is Going to Buy Your Practice?

 

Brokers and Medical Advisory Partners

Most brokers and advisors will tell you selling your practice is largely about the numbers. By now you have heard scenarios like 65-85% of gross sales. Sometimes CPA’s use the term EBITA or gross multipliers. All of these methods are important to making sure the office is listed for the appropriate number. After all, if the price is too low you leave money on the table and if the list price is too high it may never sell. Regardless of which valuation method is used or how the price is calculated, getting the right price is important to the transaction.

However the non-revenue aspect of the deal may be just as important. This may confuse you because you figure if you can sell for the number you want all is good! Let me give some specific examples of what I am talking about to better illustrate this picture. If you opened your office 25-35 years ago your office is more than a business. Staff and patient care is extremely important to you. Sure money is a big deal but after this long now its about more than just money. Some staff members have become family. People have worked for you for over 20 years. How will they be treated by the new ownership? Moreover, you have a “culture” in your office that everyone is used to. Will that “culture” continue with the new owner? Additionally, all dentists have a certain dentistry philosophy. Different people practice different ways. It is not all black and white and just as simple as creating a treatment plan and adhering to it.

So when you engage your broker have these discussions up front. Use the discovery method to find answers.

Questions medical professionals should ask when selling or buying a medical practice or office space

  1. Who is the ideal buyer?
  2. How long do you want to keep working?
  3. Can you give up the control?
  4. How involved and how long do you want to stick around?

Answering these simple questions now will insure you sell your business to the “right “ person! For a free consultation reach out to Charles Feitel at 240 372 4867 or cfeitel@hprgrealty.com. View our current listings at www.hprgrealty.com.

Lease Agreements, the terms, and Making Sure A Real Estate Pro Helps

Our clients story about their Medical Space lease agreement

We just sold a practice in Washington, DC that ultimately worked out but it was “touch and go” until the end and I would like to recant the scenario for you. Our client had a lease with a little less than three years remaining. Our client did not have an option to renew the lease. The buyers bank, as is typical, required a minimum five year lease term to finance the sale of the business. Banks do not want the buyer to be without a location so typically look for at least five years between remaining term and option periods. Even a ten year term is better for the lenders.

 

LEASE EXTENSIONS AND TERMS

The buyer was hoping to do a two year extension on top of the 3 years left on the original term to satisfy their lender. Originally the landlord was fine with that scenario but changed their mind in the ninth inning of the game and many months of back and forth and big legal fees to both parties. The deal changed to a new eight year lease with a five year option. Terms were eventually agreed to but a lease needed to be generated and signed to “close” the deal. The landlord was a big institution with a long complicated lease agreement. Both parties were under severe deadlines and if the deal did not close it may not have because the lenders are now preoccupied with SBA and PPP loans making conventional loans a major hassle.

Frankly, without 25 years of real estate experience in the market the deal would not have happened. Most dental office sales have some real estate component but the business brokers do not have the experience or license to handle the real estate aspect of the transaction. When looking to sell or buy a practice get a consult on the overall real estate situation. A licensed, experienced broker will not charge for that assessment. Every deal has a practice broker, lender and lawyer, but a real estate broker HAS to be part of the equation. The deal has many parts and you want to make sure you have properly considered every part involved.

For a free consult please contact Charles Feitel at 301 365 6940 or email him at cfeitel@hprgrealty.com.

www.hprgrealty.com

Navigating Dental Practice Sales Post 2020

endodontics procedure

 

Post Pandemic Dental Practice Sales in 2021 and Beyond

Thank god 2020 is behind us, but is it? When selling your business, the banks and CPA’s like to take a snapshot of the last three years of gross revenues when doing their valuations. Maybe 2020 was on par with the prior years but probably not considering you were ordered to close for some period of time. By example, lets say 2018 was $1,000,000 (Rev), 2019 was $1,000,000 (Rev) and 2020 was $750,000 (Rev). That makes the three year average sales of $916,666 (Rev). Assuming a value of 85% of gross sales that results in a valuation of $779,166 instead of $850,000 if 2020 had been normal . In addition, banks are being very particular about 2020 operations when preparing valuations. They are looking very carefully to see that volume of sales moved in an upward direction after you opened your office. Everyone knows sales were most likely declining but if the numbers were not moving in the right direction it could make a 2021 sale difficult.

2021 Covid-19 Restrictions and Dental Practice Sales

Is 2021 a good time to position your practice to sell on the open market? The simple answer is, maybe? How long are you going to practice COVID-19 dentistry? Are you tired of having patients wait in their car until you call them to come in to your office? Are you having to wear gloves, shields and additional PPE? Remember how uncomfortable it was wearing all of that PPE last summer? First and foremost, are you healthy? Are you at risk by practicing dentistry during a pandemic? Will there be buyers out there during these trying times? The other consideration is the duration on the virus and how it will continue to impact the practice of dentistry. The vaccine process has started and optimistically will lead to an eventual end but how long?

When starting to consider the process, we can help you evaluate all of your options.

Please call Charles Feitel at 301.365.6940 or email him at cfeitel@hprgrealty.com to schedule your free consultation. We will help you navigate these “interesting” times!

The Lease is Often Overlooked

Medical and Dental Real Estate Leases Are Crucial Aspects of Your Business

 
Now that you have decided its time to sell your medical/dental practice, where do you go from here? You have built the business into a successful well oiled machine that has a great patient list as well as a great revenue stream but its time to move onto greener pastures. In most cases, the practice broker, accountant and lender focus on tax returns, P & L statements and balance sheets. All of this is valuable information but often times the lease agreement or lease renewal agreement can be the difference in selling or not selling your business.
 

LOCATION, LOCATION, LOCATION

As you have established business in a particular location chances are the buyer wants to stay in that location. If the lease has a lot of time remaining this can be done with a lease assignment. But do you have the right to assign your lease ? If not, the landlord may be able to prevent you from selling your business. Or, is the current lease a “fair “ deal. Is the rate a market rent for that area? If not, you may or may not be able to negotiate a better deal. Finally, does the selling doctor remain liable on the lease agreement? If he/she wants to retire to Florida staying on as a lease guarantor may not be a good model. Do you have the correct lease terms in place if you require construction in order to build out the space you desire? A lot of times you can negotiate a window of time to prevent yourself from paying several months rent while you can’t even operate your business due to construction and financing matters. These are all questions we have dealt with over the years.  
These questions and others can be answered at no charge by our commercial lease experts
 
When you are contemplating selling your business contact HPRG Transitions to get these questions and others answered. 
 
Charles Feitel can be reached at  301 365 6940 at cfeitel@hprgrealty.com

Choosing the Best Medical Office Space For Your Practice

Office Lobby

 

Finding The Best Office Space For Your Clients and Potential Future Buyers

 
When you decide its time to sell your business, often times, the buyer becomes very important to you. It only makes sense. For your entire lifetime you have built this business, which has supported you and your family and caused you great joys over a lifetime.  Many times you have staff members who are part of the team and have been with you many, many years. It is important to you that your patients and staff continue to have a good medical/dental experience even when you are long gone. This is where the dilemma often occurs between selling to a corporate buyer or an individual. In general, corporate buyers are more concerned about the bottom line and will often pay more for your business. However, often times they require you to stay on board for up to three years after closing as an employee running the business. Also certain practices are better targets for corporate buyers based on a myriad of circumstances. In general, larger more visible offices appeal to DSO’s and MSO’s but not always. In summation, its always  about the “bottom line”.

REAL EStATE, ITS AN EMOTIONAL DECISION 

When deciding whether or not selling your practice is the right move let a professional evaluate your business and who potential buyers could be for your future exit. Although we do not have a “crystal ball”, experience goes a long way in setting up a plan for the upcoming future. Current market conditions play a big role in finding the best buyer. Trends in dentistry and medicine will often dictate your best path to follow. Also, when placing a value on the medical office space, corporate and individual buyers use a different accounting method. While corporate buyers evaluate multipliers and EBITA , individuals use percent (%) of gross revenue calculations. 
 
Here at HPRG we can provide you a “free” analysis to figure out which direction you should proceed. We know this business is your “baby” and we share your emotion in the ultimate sales process.
 
Feel free to reach out to Charles Feitel at (301) 365-6940 or cfeitel@hprgrealty.com.
 

Real Estate and Selling My Medical or Dental Practice

Large office building.

Real Estate Negotiations are Key to a Successful Practice Sale and Transition 

Don’t overlook your real estate when selling your practice. The location, look and feel of your office is a vital part of your practices success. Especially if you are attempting to sell it now or in the future. You may be in an office building and a lot of new young dentists want a storefront location. You may want to lease the condo you own but the new young buyer may want to buy your space for the same reason you did years ago. The lease or the ownership position you maintain can greatly affect the viability and value of your medical office space. Banks require long term leases to finance transitions and buyers want to have a “market” lease. If the buyer buys the building he is only going to pay market value.

Medical and Dental Practice Owners

As a practice owner, if you own the real estate, will you have capital gains implications if you sell the building? If you assign the lease agreement are you still legally on the hook in the event of a default? Some practice brokers will claim they can help with the leasing or sale of the real estate in addition to the sale of the business. Be careful here! Practice brokers are not licensed real estate brokers and should not be engaged in the real estate business legally. Moreover, they do not have the requisite experience or knowledge to handle your real estate situation. Nor do they have understand the local areas in terms of the data necessary to make a firm decision like market pricing, age range, population density, foot traffic, up and coming areas, etc. I have seen practice brokers try to juggle values of real estate and offices to “make the deal”. The problem is that the business and real estate are valued different by the bank. The practice is based on gross revenues or EBITA but the real estate is valued on comps and CAP rates. That means “mixing” the two is often a recipe for disaster at the goal line of the deal. We recommend a transition expert to sell the business and  a real estate expert to sell or lease the real estate.

These are just a few questions you need to be aware of when getting ready to sell your practice.

For a complimentary assessment of your individual situation call Charles Feitel at 301.365.6940 or email me at cfeitel@hprgrealty.com