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Should You Sell Your Therapy Business?
This is both a personal and professional question, and it can be shocking for any entrepreneurs who identify the business as part of their identity and lives.
But let's look at this from an arm's length distance, and try to see it objectively.
I personally decided to allow my business to be acquired early, it was founded in 2008 and barely 6 years later, it was acquired at the end of 2014 to a larger health group. I cannot disclose the details due to non-disclosure agreements, but I can share the reasons why I personally decided to sell:
I was curious.
I never had the chance to sell a business before, and I was curious how it was like, and where it'd go.
There was vertical synergy/benefits/integration with the larger health group.
So this made it simpler to be acquired, because there was obvious benefits to the business and the therapists who were with us, and definitely with this, we grew the business manifold too from 2015 - 2018.
My father died suddenly in May 2014.
His death was a shock to me, my internal systems, my beliefs; and I felt as though that there was a sense of loss of purpose, despite the busy-ness helping me progress though the grief. But I wanted to have a clear exit plan because I felt the shortness and frailty of life.
Wanting a clear exit plan.
When my father died at the age of 59, it was his last year of work, he was due to retire that year and he had been working since he was 20 years old. That made me think a little more rather than living day-to-day, building and growing the business only. It made me think of wanting a clear exit plan from the business.
The price was right.
Of course this is a major/important point - I won't sell it for cheap, if it's cheap, might as well keep it and just keep enjoying the fruits of my labour right? The acquiring company offered a good price and terms, and it was right.
Determine your reasons and your timelines
Many people asked me why I decided to be acquired, and most of the time I tell them the reasons above.
However, one good question is:
"Nigel, you're so young, what do you plan to do after you exit?" (I signed the dotted line in 2014, when I was 31 years old)
So the acquiring company plans to go public (IPO) and other entrepreneurs whose businesses were also acquired by the company are mainly waiting for the IPO event; however, for me that was bonus.
The reasons above was more compelling for me.
Things you should consider includes:
The price needs to justify the reason to sell. I wouldn't sell for anything less than 5-10X the annual profits of the business, but how value is calculated depends on the model by the bankers/acquirers.
How I increased the value of my therapy business is by building a therapy business that is close to 100% automated and delegated, making it run almost without me, so that the acquiring company never has to worry about business continuity.
If you're young, what's your plan after? Sometimes the acquiring company wants you to stay on (with a contracted bond, which was what happened to me - I was bonded for 3 years) and this is ok too - to allow handover, integration etc; but sometimes they may not want you there.
If you're closer to your retirement age, you may want to be acquired so that it'd resolve your exit plan, which also resolves your success planning/retirement phase.
Is there obvious benefits of being acquired for your business? Would the acquirer vertically/horizontally integrate with you eg can refer more patients to you or help offset/restructure/offload your efforts?
Don't just be sidelined by the price, though price is important. Think of the business and your people as well.
Everyone's reasons can differ, and this topic is something you need to consider especially when your therapy business is making money year on year already.
With just $65, Nigel and Louise started a therapy business in 2008, and
slowly built it up through sweat, tears and mistakes to a 7-figure
multi-disciplinary, multi-clinic therapy business, and was acquired in 2014 by a larger health group in Singapore.
In his free time, Nigel loves exercising, eating, spending
time with family, reading and blogging.
Read more here.
At this point in writing since January 2018, I am not affiliated to any therapy
businesses whatsoever as I've stepped down from Urbanrehab management, leadership position and shareholding - I am taking a
sabbatical to spend time with children, wife and family; exploring other creative aspects of my life including publishing, blogging etc =D