In: Categories » Home and family » Home business » Preparing your Home Health Business for Sale
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Few people enter into business with any thought of how they will exit the business and realize returns in their investment of time, money & resources. Most entrepreneurs are too busy getting their business to a point that it becomes a profitable smooth running operation. A few years down the road, there comes a point when the founder may want to find a way to exit the business he developed. Some tire of the every day grind of running a homecare agency, some just want to diversify their assets and “take money of the table” and some just simply want to retire and do not have family or partners that are capable or willing to continue growing the company that they have started. If you consider selling your business, there are things that should be done, well in advance, in order to maximize what you can get out of the business. 1) What is your Business Worth?- The first step in deciding whether or not to sell your business is to get a clear understanding of what your company is worth. It may make sense to engage the services of a homecare industry expert to garner an honest assessment of company’s worth. This should be done well in advance of selling, and repeated periodically over the years, to give you an idea of what companies similar to yours are selling for. Not knowing what your company is worth may result in you either getting less than the business is worth or not selling your business because your expectations are unrealistically high. 3) Determining your Exit Strategy- Determining your exit strategy will help you and your broker identify what types of buyers will be interested in your company. What are you hoping to achieve when you sell your company? Do you want to continue to work with the buyer after the transaction is closed or are you looking to retire shortly after the sale closes? This will also help you, the broker and your other advisors, structure the deal as well as the transition to the buyer once the sale closes. 4) Enhancing Your Company’s Value- If after a financial assessment you are not satisfied with the valuation of your company or looking for ways to enhance value, identify how to enhance the value of your company through marketing programs, increasing operational efficiencies and exhibiting good fiscal & regulatory controls. You and your broker can identify specific actions on how to enhance current and future values for your company. 5) Understanding the Acquisition Process- Buying and selling businesses take tremendous amounts of work and can be quite stressful. Sellers should know before they start what the process involves and approximate timelines in which to get a deal done. They should also understand the roles of intermediaries and other consultants, such as accountants and lawyers, as they are an integral part of the acquisition/divestiture process. Not understanding the process can cause problems and frustration and ultimately lead to a very long or unsuccessful effort to sell your business. 6) Knowing the Right Time to Sell your Business- People don’t get into the homecare business with the intention of selling but at some point, people do make the decision to sell. Market prices tend to go up and down, even within the different sectors of the homecare industry, be it skilled certified agencies, private duty/homemaker services, DME and IV infusion. Knowing when to exit from our business can make a tremendous difference in the sale’s proceeds. There is some truth in the adage that you will get the best valuations when you don’t necessarily need to sell and the worst valuations if you need to sell desperately. Knowing when to sell can make all the difference. Beth DaSilva is a business broker specializing in healthcare mergers & acquisitions. Her brokerage firm, Fleetridge Pacific, is based in San Diego, CA.
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