You must consider many things when selling a practice—whether it’s an accounting practice, medical private practice, or other business. The confidentiality of the sale is critical to protect. We’ll explain the importance of confidentiality when selling your practice and how it can damage your business’s value.
You Could Lose Staff
If the sale of your practice leaks out to the staff or peers in your industry, it could lead to a significant exodus of employees. Staff would naturally be fearful that new management could bring layoffs. Then, they may start looking for work elsewhere.
Competitors could take the opportunity to utilize the uncertainty of a sale to poach key staff members. In a transition period, competitors could offer your staff more stability, which would entice many. If you lose staff, it could damage your practice’s value and the sale agreement.
Protect Your Practice’s Sensitive Information
During the negotiating process, buyers want to examine important documents and records to gauge the true value of the business. If word gets out that the practice is up for sale, it could lead to sensitive information—client lists, financial statements, and intellectual property—becoming public. Then, your competitors could take advantage of the information and potentially damage the practice’s value.
Maintain Your Practice’s Value
When word gets out that a practice is up for sale prematurely, it immediately poses uncertainty and worries to employees, clients, and owners. All employees may feel like they’ve lost their foundation and are on shaky ground.
Staff will feel apprehensive about new ownership, and clients will have questions about the impetus of the sale and whether they should consider other partnerships. These factors can drive down the value of a business, so it’s in everyone’s best interests to keep the sale confidential.
Preserve Your Negotiating Position
Another reason confidentiality is important when selling your practice is it preserves your negotiating position to get the best and most fair price. Once it becomes public that a seller is motivated, they lose leverage at the negotiating table.
Buyers know the uncertainty of an impending sale is bad for business and can use that against the seller to extract a better deal.
Private Practice Transitions Can Help You Sell Your Practice
Selling a practice is difficult, and there’s much to consider, but Private Practice Transitions can help. Let our team of accounting business brokers help you navigate the rough waters of selling your practice with our years of experience. Browse our services online or contact our staff to learn more today.
