A well-run and well-loved chiropractic practice is a valuable legacy that many hope will outlive them. To keep a chiropractic practice running smoothly and serving the community for generations to come, it is not uncommon for a chiropractor to sell their practice to a family member, passing it down to a son or daughter that followed in their footsteps, or perhaps a sibling or other relative with the proper licensure. It sounds like an obvious win-win for everyone right, to keep the family business in the family. Yet, emotions can run high in transitions such as these, and it is important to keep a level head so that everyone involved feels respected and comfortable with the major decisions being made.
 
In many ways, it would be as wise as possible to treat the sale as you would if you were selling to someone that is not a family member or person close to you. Maintaining a level of objectivity will likely serve all parties involved well. Our previous article, “What to Consider when buying or selling a practice?”, serves as a good primer and basis to help parties on both sides of the sale figure out where things stand and what makes sense going forward. As a buyer, it’s prudent to see buying a particular practice as a probable profitable investment, with standard procedure looking for a practice that can provide a fair salary with an additional 20-30% investment return. And regarding upholding fair negotiations, hiring an experienced broker is essential to properly facilitating deals of this magnitude.
 
A chiropractor can’t be expected to know all the ends and outs or have the expertise to construct a mutually beneficial deal, ferreting out any hidden truths and suggesting creative finance options. Deals where buyer and seller attempt to negotiate without a broker fail to reach fruition 70% of the time, according to Breakthrough Coaching. 10% commission is a standard fee traditionally covered by the seller. Equal representation is also becoming more common, with the buyer and seller paying part of the broker’s fee as both are benefitting from the service. Regardless, it is money well spent for the peace of mind it provides.
 
Special Considerations for an In-Family Practice Sale
Chiropractic Economics’ article “Key considerations for a smooth, successful family sale” outlines a number of pitfalls that can occur during an in-family practice sale. For example, a buyer might expect that a “friends-and-family-discount” might be considered for the sale, but undervaluing the practice in that way can cause issues. The seller may resent or regret this undervalued sale later, or it could create a skewed view of the actual practice value to the new owner. Transparency and honest communication are key to avoid misunderstandings or unmet expectations.
 
Financing can be another tricky area in these kinds of sales. Let’s say a chiropractor wants to help finance their son or daughter as they build up their career, setting up a plan for them to pay them back. Yet, if and when payments are missed, the relationship becomes strained, and the practice can suffer. Third-party financing is less emotionally fraught for that reason, and a chiropractic broker can assist in finding the right chiropractic-friendly lenders.
 
Ideally, the new practice owner will have worked within the family business office for a significant period of time, learning how things operate, getting to know the patients and understanding the practice style. Hopefully the vision for how the practice will move forward will line up and any desired changes will be discussed and thought through. Often this can be a long mentorship process spanning years, watching as a family member gains in confidence and reaches a point professionally and financially where taking over the practice makes sense. The important things are not to take anything for granted and to ask questions to avoid false assumptions.
 
Selling a practice to a family member makes the most sense when both parties are equally committed to the sale. It also helps for both to have compatible goals and a relationship strong enough to handle the tough conversations and stress that are naturally part of these transactions. If the relationship is already strained and major disagreements exist about the sale or the future of the practice, then this model is not advisable. There is a misconception that selling to a family member is easier; however, it depends more on the compatibility of both parties’ visions for the future of the practice. The end goal for an in-family sale should be to maintain healthy personal relationships while creating a deal that makes sense for both parties and, ultimately, the practice itself.