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Hey everybody, Dr. Randi Ross here, CEO of Premier Practice Consultants. I wanted to spend a couple minutes with you talking about something that’s really important. When we start talking about The idea of a chiropractic practice for sale. One of the things that’s really important to understand is, what does your lease look like?
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And this is so important in the process of selling your business, your practice, your office. Because sometimes there’s little hidden things in there that if you’re not aware of can actually be a bit of a bottleneck in a sale and can actually kill a sale. So it’s important that you take a look at your lease and there are certain things you want to look for.
First of all, do you have any time left on your lease? If so, how much? Do you have any, what we refer to as options? So that means if your lease is up in six months. Do you have built into there the option to renew for a certain amount of time? That’s really important to understand. And are those options spelled out?
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In other words, is the structure of the pricing of those options spelled out? Or is it just you have an option and they’ll deal with presenting to you how much they want for you to continue that lease? The other thing that’s important to know is your lease assumable or transferable? That should be a paragraph.
within your lease that is really important to understand and really important to be clear on. Couple of the things that you want to look for in there is what is the landlord going to require to assume what’s left on your lease to a buyer or to transfer it? What type of financials are they looking for?
Any other elements that might be important for us to know as we represent your practice for sale that we need to convey to a potential buyer. And when, a chiropractic office is for sale, it can sometimes be a little different than, what we refer to as, corporate stores or chain stores or anything like that.
You have to also really look deep, especially if you’re in a very big center that is managed by a management company. You might have a giant anchor store there, something of that nature just as an example in the South, the really big anchor store and a lot of larger shopping centers are public supermarkets.
What you need to check, if you’re not sure, is if you assign that lease or someone assumes it. Are you still obligated to be the guarantor in that lease for the remainder of what you’ve already signed on for? So that means if I buy your practice and there’s three years left on the lease and they assign the remainder of that lease to me, you’re still listed on the lease if for some reason I didn’t pay or I declared bankruptcy.
You’re still obligated to pay. So understanding if you’re still a guarantor on your lease is really super important. The other thing to understand is, does a lease require a personal guarantee? The reason why that’s important is because with all the corporate buyers that are out there today, and the large group investors and things of that nature, they will not personally guarantee a lease.
So that’s something that we need to understand. Usually, when it’s in there with these very big centers with the big anchors like a Publix, there’s no wiggle room. If it’s a little smaller center and you know the owners, there might be some wiggle room there, but these are really important elements about your lease that you need to clearly understand as you’re preparing for a sale of a chiropractic office.
Okay, so take a look at that and you should know those elements anyway. You should really know all about that. Take a look at that be on top of that, especially if things come time to renew or take advantage of an option, and you’re thinking about selling, it’s really important to understand what is your exit strategy on that lease?
Is your landlord flexible? And are they willing to work with you, with a potential buyer? Take a look, make sure you understand all those elements. It’s just as important as anything else when it comes to the sale of chiropractic office. Show it to a lawyer. They can always help you because sometimes that legalese gets a little twisted and muddy and you don’t always understand it.
But another really important element of what we do when it comes to selling your chiropractic practice, representing it for sale. That’s it for today. Dr. Randi Ross, CEO of Premier Practice Consultants. I look forward to getting a chance to chat with you again in the future.
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