Ownership and your proposed exit
The owners need to agree on the interests available for sale, whether the premises are included, and the work each owner is prepared to continue after settlement. If your plans differ, resolve those differences before presenting a proposal to buyers.
Your lawyer should review the partnership or shareholder agreements against that proposal, including any provisions affecting a transfer, exit or change of control. Your accountant can assess the financial and tax consequences before you commit to a structure. The Australian Government's business sale guidance identifies defining what is for sale as an early step in preparation.
Be specific about your continuing involvement. A commitment to remain available during a handover leaves room for different expectations about clinical sessions, management duties and duration. Establish what you are prepared to negotiate and which conditions would make an offer unsuitable.
Earnings and financial evidence
Prepare the historical accounts alongside current management results and an accountant-reviewed reconciliation of adjusted earnings. Where the practice earns service fees from contractor GPs, explain the relationship between gross clinical billings and the income retained by the business. A buyer needs to be able to follow the calculation through to the underlying records.
For normalised EBITDA, support adjustments for owner labour, related-party rent and one-off expenses with the assumptions and evidence used. Include replacement costs for work that will continue after you leave. Identify any proposed savings that depend on changes a buyer has yet to make.
Check that the financial periods align across the accounts, billing reports and workforce information. If you have changed fees, recruited a GP or altered service-fee arrangements, separate results already achieved from full-year projections. Explain vacancies, unusual expenses and other events that affect comparisons.
The guide to what your practice is worth covers the valuation discussion. For readiness, assemble figures your accountant can support and a buyer can examine.
GPs, staff and operating capacity
Prepare a current workforce summary covering sessions, vacancies, locum use and known departures. Match it to the signed GP service or employment agreements and record any arrangements that still need review. Your lawyer can assess what the proposed sale means for those agreements and any required consents or replacements.
For any planned increase in capacity, record the recruitment stage, proposed start date and sessions, together with the associated costs. Keep committed appointments separate from recruitment still underway when preparing forecasts.
Review the practice manager's role, nursing coverage and administrative responsibilities alongside the GP workforce. Identify where you would need additional capacity if you reduced your involvement. Confirm staff entitlements and proposed transfer arrangements with your advisers, and distinguish confirmed commitments from assumptions about who will remain.
Premises and lease conditions
Have your lawyer review the lease, variations and side agreements for remaining term, renewal options, rent reviews and provisions relevant to assignment or a change of control. Identify which matters require a landlord's decision and when that decision would be needed for the proposed sale.
If you own the premises through a separate entity, establish the terms on which a buyer could occupy them. Your accountant should use the proposed occupancy costs when assessing earnings under new ownership. The Medius discussion of lease terms and property tenure covers the relationship between tenure, rent and a practice sale.
Include pathology, allied health and other occupancy arrangements in the review. Confirm the income received, the current agreements and the terms on which those arrangements could continue. Where a renewal or variation remains under negotiation, show the current position and the proposed change separately.
Owner dependence
In his article on owner dependence, Dr Chris Mitchell proposes testing whether the practice could operate for three months without the owner while maintaining patient volume and revenue, without relying on them for operational decisions.
Use that question to examine responsibilities with the practice manager and co-owners. Identify the decisions that still require you, the relationships you manage personally, and the work someone else would need to take on. Include the authority, access and time required to perform those duties.
Where you have delegated a responsibility, establish whether the person taking it on has managed it independently under normal operating conditions. Record the additional cost and any work that continues to return to you. If the proposed sale depends on your remaining involved, describe that role alongside the financial assumptions.
The RACGP's guidance on changes in practice ownership recommends succession planning to support continuity through planned and unplanned changes.
Documentation and controlled disclosure
The Medius sale readiness documentation guide brings together the records used to assess finances, compliance, operations, infrastructure and succession. For your internal preparation, assemble:
- Historical financial statements, current management accounts and the earnings reconciliation.
- Ownership records, shareholder or partnership agreements and the proposed sale terms.
- GP and staff agreements, workforce information and employee entitlement records.
- Premises documents, occupancy agreements and relevant supplier or software contracts.
- Accreditation records and advice or correspondence relating to known compliance issues.
- Proposed handover arrangements and a record of unresolved matters.
Check known payroll tax, employment, Medicare, registration or other regulatory issues with the appropriate adviser. Record what has been resolved, what remains under review and the advice needed on disclosure. Where you cannot yet quantify an exposure, identify what further work is required.
Before releasing information, agree access arrangements with your lawyer. The OAIC's guidance on selling a business recommends considering de-identified or aggregated information for due diligence and maintaining control over disclosure. Assess a prospective buyer's request for information against the practice's privacy obligations, including those concerning patients and staff.
Which gaps to resolve before going to market
Prioritise preparation work based on its impact on the proposed sale and the time needed to resolve it. Locating a missing document may be straightforward. Negotiating premises terms, recruiting a replacement GP or demonstrating the results of a management change may require a longer lead time.
For each outstanding matter, record the action, responsibility, expected cost and evidence of completion. Dependencies also need to be clear. You may need proposed lease terms before your accountant can finalise the occupancy-cost assumption, or an agreed owner departure date before you can assess replacement staffing.
Consider three decisions with your advisers: what must be resolved before approaching buyers, what can remain open for negotiation and what you are willing to accept in return for an earlier sale. Base that discussion on the consequences of each issue, including any effect on funding, consents, earnings or your continuing obligations.
If a buyer approaches while preparation is underway, review the outstanding issues against that buyer's proposal. Establish which assumptions you can support now and which need further work before you agree to price, conditions or timing.
Business acuity and sale readiness
Start with Proxeno's business acuity assessment to review how the practice operates and identify areas for improvement. When the business is in shape, use the sale readiness check to assess preparation across finances, compliance and governance, operations, premises and succession. Both assessments are free.
Use the findings with your accountant, lawyer and practice team to agree the remaining work. Neither assessment provides a valuation. Once you are ready to approach buyers, the guide to selling a medical practice in Australia covers the sale process.
Proxeno is an initiative of Medius Global. Proxeno is a matchmaker, not a broker, and does not provide valuations. Your accountant or an independent valuer undertakes the valuation.