Timing Your Practice Transition? Look to Your Lease!

In order to get the best practice price, you want to be attractive to as many buyers as possible. In our market nowadays, practices are almost as likely to be sold to an existing practice (a practice merger) as they are to be sold directly to a practitioner who will take over the practice. Naturally, buyers want options. The ideal timing is that your lease is renewable, assignable and up in the year of your transition. This gives the buyer a choice of negotiating a new lease with the landlord or moving/merging your practice.

We’ve seen situations where Doctors signed a 10-year lease in a professional building where new patient traffic is almost always low. Potential buyers don’t want to spend the next decade in a low visibility situation, no matter how attractive the decor and equipment.

Many Doctors start thinking about transitions five years in advance of their likely retirement date. If your practice is large enough to bring on an associate(s), you’ve got a built-in buyer who you can presumably sell to and work for, for a while. This sort of tapered retirement is desirable to many. If your practice isn’t large enough for that, the lease timing is more critical.