Why planning is so important

By commencing planning years ahead of time you will not only meet your future personal and financial goals but also help identify your ideal successor and set them up for future success in your practice. 

Some more benefits of a well thought through succession plan are: 

• Maximising the value of your business to achieve the best commercial outcome
• Achieving work/life balance prior to exiting your business and prolonging your enjoyment in the practice
• Witnessing your practice remaining independent and thriving beyond your ownership, while ensuring your patients are in good clinical hands into the future
• Transitioning smoothly into retirement, or your next business adventure   

1. Have you put thought into your succession plan and envisaged what you want it to look like?
2. Is there anything you would like to achieve in the business before exiting?
3. What is your preferred exit option? Do you have an ideal buyer/successor?
4. Did you know that a best-practice succession plan should be formulated 10-15 years ahead?
5. Are you aware of the options available and the considerations associated with each?
6. Have you put thought into what life would look like post running your business?
7. Could you see yourself working within your practice on an employment basis after you have sold?
8. Are you aware ProVision has the expertise to help you develop and execute your plan?   

The great first step is to complete these questions and start exploring your options. Take your first step and book a 30 min session now with ProVision Business Services Manager mark Corduff

• Are you prepared to give up some control of the business and share the load?
• What is your current work/life balance, and would you like to see this change?
• Are you prepared to work with a potential partner employee for 6-12 months to see if the partnership is compatible?
• Have you considered a second consulting room to create growth in the practice and allow more than one optometrist to work at one time?

• We have in-depth experience to guide you through the options available to help you identify the best fit for you.
• We can provide you with an estimated practice value in the current market.
• We can help you to source a potential business partner.
• We can provide multiple considerations for inclusion in the structure of a Partnership/Equity Buy-in/Shareholder Agreement.

• Do you know the true value of your practice?
• Are you prepared to stop working if the purchaser doesn’t require your services?
• Can you work in a practice for a new owner, who will potentially make changes to the practice you have run for many years?
• Have you sought financial planning advice to determine if the value of the practice will provide enough funds in your retirement?

• We provide industry specific guidance around all the considerations important for preparing your practice for sale in the years leading up to this event.
• We can provide you with an estimated practice value in the current market.
• We can advertise on your behalf in market leading classified pages free of charge.
• We have a pool of interested parties to promote practice sale and partnership opportunities to assist you in achieving the best outcome.

They come in the form of:

-Our Associate Membership

-Current Members looking to acquire practices

-An active list of potential purchasers

The ProVision Associate Membership is a collaborative program that aims to educate and prepare the next generation of independent practice owners with the business and commercial skills to confidently take ownership of practices just like yours.  To find out more about the Associate Membership, or to encourage a future partner or buyer working alongside you to join, click the link below to access the application brochure.

We provide guidance and advice during the private sale process.

• Most transactions require the seller to stay on as an employee of the new entity for a specific amount of time, most commonly 3 years. During this period the former owner becomes subject to the decisions of the new ownership.
• These decisions may include longer trading hours, opening on weekends, limited vacation time for the seller and no longer acting as the primary decision maker for clinical equipment, staff hiring, purchases, marketing, policies and procedures.

In our experience, when an independent practice owner is approached, they are often unaware of the other options available to them. 

Typically, this will see your practice valued at multiples of around between 2.5 and 3 times ‘normalised’ profit (eg removing ‘personal’ expenses from the Profit & loss). 

You get to keep 3 years profit and sell the practice at the end.

You get ~4 times adjusted profit up front and work for the consolidator for ~3 years at an agreed salary, with a bonus at the end for achievement of ambitious targets. 

Ownership transitions over an agreed period whilst you get to influence how the incoming owner looks after your staff and patients, and you retain the profits. 

• Are you prepared to maintain responsibility for practice operation?
  
• Are you able to work alongside the new employee to assist with the transition of patients?
• Do you have the right team and systems to manage daily operations and drive the business forward?
• Are you prepared to step back into the practice to see patients or find locums when the optometrist employee is away or leaves their employment?

• We have an in-depth recruitment process to find you the best optometrist employee candidates assisting to recruit over 150 staff for ProVision members annually.
• We can passively market your practice for sale at any stage.
  

• Provides a transition period by giving you the option to progressively reduce your working hours.
• You have full control of the outcome including timing.

• When does your lease expire? OR if you own the premises do you want to sell or find new tenants
• Do you have a plan to maximise superannuation contributions leading up to closure?
• Are you able to sell some of your equipment?
• How will you manage your staff and advise your patients?

• We will guide you through necessary considerations to help you prepare for the best outcome.
• We will work through a practice closure checklist with you.
• We can provide Human Resources, expertise, to assist with staffing considerations.
• We can advise you on how to communicate the closure to patients.

Understanding the value of your practice

A valuation from an experienced valuer is the cornerstone of an exit plan and should be the first step taken. It sets realistic expectations for both buyer and seller of price and can also be used in support of obtaining debt finance by the purchaser – David Collins, Director of the Synstrat Group

David continues: “Whilst price is always the outcome of negotiation, a valuation provides peace of mind that a seller is receiving fair value.  Often deals fall apart where there is wildly different expectations. It is important to use a valuer that is experienced with professional service businesses as they have unique facets which must be taken account of.  Synstrat have decades of experience valuing businesses in the health services sector, specialising in the optometric industry. We are also able to assist in structuring the key commercial terms of sale and are able to provide capital gains tax advice to sellers for what is a critical transaction in their wealth creation journey.” David Synstrat, Director of the Synstrat Group

Understanding the value of your practice can help you identify areas of opportunity to grow the value of your business while planning for sale while ensuring you have all your financial and business reporting in order.  

There are several ways a business can be valued. The most widely used method across the optometric industry uses a process based on a multiple of your adjusted net profit.  

When arriving at the multiple, careful consideration is taken into account around the return-on-investment opportunity for a purchaser along with a number of industry specific factors such as:

The growth trend and future earning potential of your practice
The age of the practice fit out and equipment
Comparisons of specific business performance in relation to industry benchmarks. Some examples are, the percentage of your consult income to retail sales, along with wage costs
Location of your practice and surrounding competition
Business systems and digital presence of your practice
The ability of the owner to transition out of the practice over a period of time  

Our wonderful Business Coaches play a key role in assisting members with their succession planning. Kelvin Bartholomeusz, Business Coach in NSW has assisted countless members exit their business on their terms. Below he shares a great snapshot of the entire journey with some really valuable insights worth considering for your plan.

When deciding on the ideal plan to provide you with the best commercical and personal outcome there are a few key considerations.

• Timing is critical. A 5-10 year plan at a minimum can allow you the flexibility to find the right partner, or grow your business value while benefitting from the profits prior to a well planned sale.
• Finances are critical. Seeking proper financial advice to ensure you have enough super, savings and equity in your business are important and will assist in narrowing down to the best plan to ease into retirement comfortably.
• Advice is critical. Your accountant/financial advisor and ProVision are your trusted advisors in this space and in combination can assist you in the right plan and keep track of it step by step to ensure you get the best outcome.

Organising your support & having your affairs in order

Preparation and organisation will be your keys to success. Prior to selling or bringing on a partner it is important you get your affairs in order and engage with the right support. 

 Below are a core list of considerations to ensure you’re ready for the market. 

1. Engage with your Accountant, Solicitor and ProVision to assist you with your plans.
2. Get your financial information in order.
3. Obtain a practice valuation.
4. Consult your financial advisor.
5. Consult ProVision to assist with how to prepare your practice for both a smooth transition and a good commercial outcome.
6. Decide to sell privately with ProVision assistance or seek the services of a qualified broker. 
7. Decide if, and how long you plan on transitioning out of your practice
8. Have your solicitor organise your legal paperwork.
9. Be prepared to be open to all possibilities ensuring you act promptly throughout the process and lean on your advisors each step of the way. 

Preparing your practice for sale or partnership

Having your successor in mind is the key objective when preparing your practice for its next stage of life. The longer you allow yourself to plan, the increased likelihood you will sell successfully and achieve a better commercial outcome. 

The link below will provide you with clear guidance around all the key requirements you should begin addressing as soon as you start planning. ProVision can provide valuable assistance in all areas so ensure you contact us for any specific help.

Executing your plan  

I get enormous satisfaction pairing the right potential partners or buyers with members looking to exit their business. Clearly understanding the individual needs of both parties is something I focus heavily on prior to facilitating a conversation – Mark Corduff

The best avenues to find a potential partner or buyer – how ProVision can help and who to contact:

Within your own practice: This is the best place to start. Is there anyone that has expressed interest in the past, or who is worth having a confidential discussion with?

Your professional network: Is there anyone you know, ideally locally, that would be interested in the opportunity of becoming a partner or purchasing your practice?

We have a pool of prospective purchasers we can introduce to you as we are proactively engaging with the independent market.

Our growing number of Associates as part of our Associate Program are the next generation of independent practice owners. We work hard to prepare and educate them around ownership and pair them with suitable members looking for partnership or sale opportunities.

We have a pool of current members looking to acquire new practices.

We have a growing pool of prospective independent purchasers we can also reach out to on your behalf.

The importance of finding the right fit with a partner or buyer

Contingency planning