re: Should I sell my medical practice? New update page 4

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For every PE firm that does a good job of managing healthcare operations there are 5 others that don’t understand the industry, try to gain returns that aren’t possible and end up eventually crashing.

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I've feasted on these dipshits. Sweat out their initial barrage, then pick over the carcass when their done and take what you want. Burn the rest to the ground.

Every time they come after me, I come out better off. I just want to be left alone. Money is no longer a motivator for me, but I love to compete. You'd think they'd get smart and just buy me out, but they always think they can backdoor me, go cheap and win.

Many times you can get your practice back later for a huge discount if they haven't destroyed it's viability and reputation.

Another component to this is they are getting my AR also (around 200k) but I have to clear the debt. Does anyone know what is standard in this situation regarding existing AR and outstanding debt? I feel like if they will cover one of those items that could be a big piece here.

This thread has been amazingly helpful so far and I am grateful. Truly, thank you all.

I think you should sell but the idea that you’re doing two practices right now and they want you to run 5 sounds like a huge increase in work. If I was you I might take that offer but shop around for a better job. At your age the 1.5MM should get you pretty far towards coasting to retirement

Coast Fire Calc

Use this tool to calculate coast fire - the point at which OP doesn’t need to save for retirement, he just needs to cover living expenses til then.

Assuming 950k in investments and $10k/month in current dollars of spending in retirement, and currently age 40, with an 8% growth rate, 3% inflation, and 4% SWR, he can retire at 65 and start coast fire now

But I’m assuming his debt gets bought out, in which case he nets $300k more pre-tax, and he can retire much earlier with coast fire now. Also I’ve never sold a business but would that be capital gains? If so, much smaller tax rate

Edit: I think all of these are fairly conservative values. But if OP wants to live like a high roller then he may want a different strategy, or be more aggressive after selling his business. It’s also worth noting OP significantly reduces his risk profile by making this sale now vs hoping to sell it later

Also I missed the 2nd business, that may be enough to cover most of his expenses now or fluff his retirement spending budget significantly

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I’d take the deal. Have my retirement set up (with the 800kish after taxes from sale.)

You got $70 k from other business

$200k ish a year working from people you sold to…

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Yep im selling and taking the 800ish and investing.

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Another component to this is they are getting my AR also (around 200k) but I have to clear the debt. Does anyone know what is standard in this situation regarding existing AR and outstanding debt? I feel like if they will cover one of those items that could be a big piece here.

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that's money you've already earned and paid overhead on. Either they pay you your usual collection rate or you keep them. That's your money.

In my specific industry, 4-6x EBITDA is common. Since my second office is just starting to get in the black, I would say if it reaches comparable income to my first office, this deal represents about 4.5x EBITDA.

Another way in this industry to value them is gross revenue, this would be about 1-1.2x typically. From that angle, if my second office reaches same volume as first one, this would represent about 1.3x.

I think it’s a good deal, especially since the second office is showing promise but still hasn’t really fully arrived yet, but they are basically valuing it like it has IMO.

Sounds like part of it is they are void of leadership in the area and I would fill that void. I am probably going to take the money, collect the bonuses for 2 years, and if it really sucks I’ll leave after 2 years and figure out what’s next. If they want to open a ton more offices and have me spearhead that in the region and it ends up being a great situation even better.

I agree about my AR. I am going to propose 1.8, and hopefully we can meet in the middle at 1.65. 1.65 would be a number that after taxes and debt would leave me almost exactly 1 million when the dust settles. Not enough for a 40 yo with 4 kids to retire on, but I am going to continue working anyway and it’s certainly enough to pull chips off the table, derisk, and throw it on cruise control for a while.

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Appreciate the kind words. Seems like the money opens a ton of doors for the second half of my life. Am leaning toward countering at 1.8, but may just accept the current offer, pay the taxes, pay the debt, and still have about 900k leftover.

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Always counter. Counter higher than you want and a very specific number. They are trained negotiators adept at getting what they want at a discount.
Don’t go crazy but don’t accept the anchor offer either

Also, don't start spending the money or moving on in your mind until it's done. They may start trying to nickel and dime you once they deal in made verbally. If they start doing that, walk away. They were never that serious and trying to bait you in to a dream that many can't walk away from.