Selling a Physiotherapy Practice: It is not that easy (at least not for me!)

Feeling stuck!

It seems like a long time since I last felt like writing. It is not that I did not have anything to say; it is more the emotions that I have experienced over the past several months have defied words and have interfered with any creative word-finding capacity. So, I will now share with you what has been happening. Much of the emotion has dimmed, and I can now reflect. On the 19th of April 2023, Active Recovery transferred to new owners.

It does not seem that long ago that I was a 29-year-old woman, married with two small children with a building vision of what I wanted from my professional life. Maybe this was ambition? And without it, I don’t doubt that the dream would have remained just that.

Over many years of sliding doors events, good fortune and experience, strategic thinking and considered risks, I achieved my vision. I have previously written about some of this. You will find blogs in the archives. I have also written about the considerable challenges and lessons I have learned from building and leading a healthcare business.

In the past year, burnout was grinding away to the extent that I could not reflect positively on my professional career. My thoughts were a jumbled mess. It has been tough on my family. There are no words to say how important they have all been through this process. So supportive and grounding. I love them all.

I had enthusiastically engaged in mentoring. I was so excited to be helping others and thrived on the conversations with my mentees. As time passed and circumstances became more difficult for me, these relationships experienced role reversal. I am so grateful to these people. You have not heard from me for a while and deserve an update.

I also need to shout out to all of the leadership gurus, coaches and others who focus on self-care as a means to steady a ship that feels like it is sinking. There is truth in their words. Surrounding myself with family and friends, enjoying nature and regular exercise, hitting that tennis ball and laughing with my tennis buddies was a lifeline.

I always knew there would be an “end”; I did not know what it would look like and was afraid of the seemingly endless uncertainty and the ongoing stress in a business that kept throwing the same challenges at me with no gas in the tank to meet them.

So, let me tell you what has happened. It is a long story with lots of moving parts. Owning a business can be tricky, but little did I know that getting out of one can be so difficult. Over the past twelve months, many of my value systems have been challenged and, to some degree, increased my disillusionment about the future of the physiotherapy profession. Coming out the other side, I realise that when you are entrenched in a difficult process, it is easy to only see the negatives.

In Spring 2019, I returned from a wonderful three-week holiday to Japan. On my arrival back, I told my business partner that I was keen to hand over the business to him at the end of June 2020. This would give us about nine months to have a seamless transition. Little did we know that a dark shadow was looming over these plans. And little did we know, and just as well we didn’t, that not only would Covid be part of the end story of our business but that we would also experience all of the usual challenges of business ownership but in hyperdrive.

To not transfer the feelings many business owners experienced during the long years of Covid, I will not elaborate on these challenges. They are best secured away in a locked box, compartmentalized, and put down to a period of considerable challenge. By the beginning of 2022, it was clear that we would need to consider selling the business as a going concern. Although not what it had been through the heady heights of the 2010s when things felt relatively easy, the foundations of the business had always been good and had remained profitable throughout Covid. We did not have the drive to build again. Many of our referrers had moved on to other things due to their repositioning and prioritising from Covid, and we would need to find new networks. There has been increasing competition in the market, and we would need to work hard to establish ourselves as a worthy referral base again amongst all the new noise. We had highly valued clinicians move on to new ventures - to jobs that offered more flexibility which had shown itself to be of considerable value during Covid, especially in Canberra. In this Public Service town, working from home was the new mantra. It is pretty hard for a face-to-face Physiotherapy practice to compete with the working conditions and remuneration offered. We needed to recruit! It was difficult, and we were very low on personal resources. It was all too hard.

When facing the prospect of selling, we had no previous experience. We had few avenues to seek information. Anyone I spoke to who had been through a selling process had found it long, difficult and expensive. When low on personal resources, we wanted something quick and easy. (Not likely). So we needed to go through a fact-finding mission to establish how to do it. My business partner and I had to ensure that we were aligned on what we wanted. We both knew why, which was the main driver. We knew that neither of us wanted to or even emotionally could continue. We had long relied on each other for support. We always had that, but it was not the same excitement and joy we had from building and running a business together.

The next 12 months were very difficult. Not only was I going through a grief process and lots of uncertainty, but I also needed to keep going until a resolution was reached. There were bills to pay. This effectively meant just going to work and “faking it”. I am not very good at that, but fortunately, those walking through the doors needing help provided a positive focus.

The choices:

1. Approach current and past employees

2. Contact other people we knew who might be interested in purchasing

3. Approach Brokers.

4. Close the doors.

One of the most difficult aspects of selling was the need for confidentiality (or secrets) from our current staff. There was a big risk of letting our current employees know that we were selling for fear that they would leave, which would have potentially negated any value associated with the business. For me, this was very tricky, and as you can see, based on the process above was practically impossible. So many times during the year, I was ready to pull the pin and come out and tell everyone. It seemed easier than the secrecy. On the other hand, we needed to try our best for them and our clients to secure a buyer. A difficult balance. I now acknowledge that it was reasonably widely known that the practice was for sale, or at least there was gossip about it.

Current and past employees we approached were ruled out fairly early. We approached several parties who we thought might be interested. Whilst receptive and empathetic, they were not in a position to commit.

Our first attempt at using a Broker left us deflated. The valuation was negative. Yes negative! This is despite the practice continuing to make a reasonable profit, provide good incomes for the two partners and no debt. The reason given was that due to the loss of staff, there was no viability for a sale. Highly disappointed, we reverted to the idea of closing the doors.

One bleak winter day about a year ago, I did a Google search and decided to approach another Broker. Herein lies a five-month process. When we first contacted the Broker (in both cases), we were asked to provide information and that it should not take long. (A matter of minutes) The information-gathering process, including all financials for the past three financial years; payment summaries; staff employment agreements; insurances; leases; equipment inventories and billing types and reports, took a couple of weeks. We then had to wait six weeks due to a backlog of practices awaiting valuation before we got a price. We had one person who had the right of first refusal, and they were given a week to decide, after which time the practice was actively put on the market. From the first contact with the broker to “on the market” was more than eight weeks.

Then we just had to wait…..and wait…..and wait! This apparently is “normal”. We had weekly or fortnightly updates from the Broker reassuring us and letting us know there was one possibility. At our request, we had a conversation with the prospective buyer. They were not very interested in knowing anything about the practice or the Canberra Environment. The focus was on the potential financial return. They were from interstate. This raised some alarm bells for me as my first business partner had a rehabilitation-providing practice that she sold in 2005. It took less than six months before the business was annihilated; staff left the sinking ship, and the new owners rarely appeared or showed the business the care it needed to grow and flourish. Now some of you reading this will be thinking, “Why should you care”? It is just a business! “Oh, you are too emotional. Take the money and run and leave it. It is none of your business what happens to it. Realise your asset.” I always suspected this would be a very big issue for me. It was never just a business to me. Is this where I trip over those constantly espoused, Values? Anyway, based on my experience, it is those important things like how the business is run, who your customers are and what kind of culture you nurture that are fundamentally important to the success of a business. I was flummoxed that a potential buyer did not want to know about any of those things.

Now everything goes quiet………………………………nothing……………………….” It is okay”, says the Broker. “It is quite common for this person to go quiet. They are still interested; be patient; an offer is probably pending”. Now six months since the initial contact with said Broker. The beginning of December 2022 and….an offer!! Quite a good one! BUT»»»>

The conditions:

After many conversations between myself and my partner, we could not agree to the conditions. “WHAT” I hear you say. “Are you guys crazy?” Maybe?!

We needed to remind ourselves about why we were selling. It was about fatigue, deteriorating mental health, loss of joy, excitement and drive (burn-out). Reading between the lines, the conditions would not make this any better. We were worried that they could be exacerbated.

The fairly standard conditions in these types of contracts are that we would stay on and manage the practice, help with recruitment and undertake a clinical role. Just what we had been doing but for someone else. Our deep concern is that the buyer had no knowledge of the practice, the people, our staff or the environment and with our practice being one of many they owned, they would take a cookie-cutter approach to operating it. I felt that there would be significant tension within myself which would not improve my mental health. There were so many “what ifs”. What if our staff did not like the new ownership style and left, and we were held accountable for this? What if our referrers and patients were treated differently as a vehicle for building someone else’s empire? What if we were going under the pump to achieve KPIs when we lacked the drive to build the business again for our own benefit? This looked and felt stressful. We would need to stay for one year under these conditions. After the past three years, this felt like a longgggg time! I had witnessed several GPs who had sold out to corporates and signed themselves up to five-year contracts for large amounts of money. I saw how unhappy they were. It just did not seem worth it.

Another sticking point was the “restraint of trade”. I understand that the new owner needed to protect their business interests. However, we could not agree to the 15 km restraint from working in any practice in Canberra after the initial year. The restraint would be in place for two years. We would effectively would be unable to work anywhere in Canberra for two years unless we stayed where we were. It may have worked, but the deep feeling was that it was too risky. Too many “what ifs”, many of them perhaps philosophical. (Over-thinker???).

So many scenarios went through my head where this did not look like a deal I could agree with. Fortunately, my business partner agreed.

Come Christmas 2022; we had been almost a full year of hanging in there with no real avenue for progressing forward. We knew a little more but had no plan. Tired and despondent, and with another bout of Covid trouncing through the practice, we had little to celebrate or people to celebrate with. Our annual staff Christmas celebration was deferred, and we closed the doors for ten days to relax and spend time with family.

To be continued…………………..

Dianna Howell (2023)