How do you know if your consultants are providing the right advice?
Good consultants are often hard to find – though their assistance is essential. Legal, accounting, and tax advice is critical when purchasing a healthcare practice (just as it is for any business).
Good and relevant advice relies on sourcing experienced and expert consultants with knowledge in your area of practice. It also relies on knowing how and when to use these advisers.
Choosing your consultant
You’ve decided that purchasing a healthcare practice is the right decision. Once you have identified the practice which meets your needs and objectives; and you have completed your preliminary negotiations and assessment of the practice, you’ll need to get your team of advisers together.
This is a vital step. Seek independent and expert advice early and move quickly.
Your consultants team should include:
- An accountant with either expertise in the profession; or who previous experience in assisting with the purchase or sale of healthcare practices. Accountants know the tax laws and compliances. They know bookkeeping processes and the ins and outs of income and expenses etc., but do they know anything about purchasing healthcare practices? Why would they? Unless they have firsthand experience in investing in a healthcare practice why would their advice be any different from Brent who makes your morning latte.
- A lawyer with experience in the industry; the dangers to look out for with purchasing a healthcare practice are very different from those when purchasing a property or residential building.
- An experienced Healthcare practice valuer who will take into consideration turnover, patient numbers, comparable sales in the area, marketing in place, location
How early in the process you involve your team of experienced advisers will depend on your personal experience in buying practices, knowledge and skills. Ultimately, it is your money and your decision. The team of advisers will be characteristically be conservative and adverse to risk, however to purchase a healthcare practice you will need to acknowledge and accept some risk.
Seek their advice but at the end of the day, the decision is yours alone!
The key factors in assessing the suitability of a consultant include:
- Qualifications, skills, experience, and expertise;
- Your relationship with them i.e. the ability to work with them and trust; and
- Cost – are they providing value?
Questions for engaging consultants
- How many healthcare practice sales have you worked on?
- Were the outcomes successful?
- Did all the purchases settle?
- How long did the process take from agreement of sale price to settlement?
- How do you charge (i.e. fixed cost, hourly rate, or commission)?
- What are the common problems or issues you have confronted in the purchase of a practice?
- How did your expertise add value to the process?