Every Practice Has A Story. What’s Yours?
When it comes time to sell your practice or partner with a strategic investor, the story you craft about your business will determine whether or not you are able to attract qualified prospects and earn the pay-out that you are seeking.
Many physicians make the mistake of simply thinking that their historical financial statements do all the storytelling. And while your income statement (P&L) and balance sheet are important components of your practice’s story, they often need significant scrutiny, adjustment, and explanation. Furthermore, even historical financial statements, when adjusted, do not, on their own, convey the true value of your practice. Rather, the story must also include a compelling narrative outlining your practice’s future growth potential.
That’s where I come in.
As a licensed investment banking representative, I specialize in guiding physician owners through every phase of a practice sale transaction. During this process, one of the most important documents I create is called a “Confidential Information Memorandum,” or “CIM,” as it is known in my industry. This is a powerful marketing and presentation tool that is used to communicate the story of your practice.
Your CIM is a comprehensive, authentic, and compelling narrative that goes far beyond your practice’s historical and projected revenue and expenses. It paints a clear and persuasive picture of why an investor should consider making an offer for your business. Here are just a few of the many components of a CIM:
Value Proposition:
What makes your practice unique and stand out? What is it about your providers that sets you apart and provides a competitive advantage in the market? Crafting answers to these questions, among others, is key to telling your story.
Financial Performance:
Not only do we provide detailed current and historical financial information pertaining to your practice’s revenue, expenses, payor mix, reimbursement rates, and overall profitability, among other relevant metrics, but also, we provide a detailed “roadmap” which allows prospective investors to understand the “bridge” between where your practice has operated historically and where it is going. One key element in our roadmap is detailed adjustments to your historical financial statements, which help buyers readily understand the economic reality of your business. These adjustments can include normalizing adjustments to remove non-recurring expenses, one-time gains or losses, discretionary items, and other unique situations that are not likely to be repeated. However, adjustments can also include additions to volume, revenue, and expense to reflect growth initiatives currently under way but not fully realized, as one example.
Growth Potential and Opportunities:
One of the most important aspects that your CIM must demonstrate is your growth potential. While results from historical operations, “as reported” and even “as adjusted” are interesting, they are only important to the extent that they help predict where your practice is headed. In other words, investors and strategic partners want to see that there are substantial opportunities to expand your practice, increase your patient base, and continue to enhance profitability.
Our experienced team of advisors will work with you to highlight your value proposition and build a compelling story about your practice.
What’s your practice’s story? Feel free to contact us here to craft it together.