Physician Exit Planning: Setting Up Your Financial Future

Physician Exit Planning: Setting Up Your Financial Future


By Brent McClure, CPA, MBA, CEPA, Anders Health Care

As a physician, deciding when to sell or move on from your practice is not an easy decision. Planning your exit should be an ongoing business strategy, not a quick solution. Physician exit planning is all about creating, preserving, and harvesting the value of the practice during a successful transition. A successful exit planning strategy will focus on three goals:

  • Maximizing the value of the organization
  • Ensuring the physician is personally and financially prepared for the transition
  • Making certain the physician has planned for the next chapter of life

Owner Readiness to Exit

In a 2015 State of Owner Readiness Survey by the Exit Planning Institute, thousands of middle market privately held business owners were questioned in order to access both their company and personal readiness to exit the business.  Some of the eye opening statistics included:

  • 80-90% of business owners’ wealth is tied up in the business
  • 2/3 of owners were not familiar with all the exit options available
  • 83% of business owners had no formal transition plan; 49% had done no planning at all
  • Only 7% had a formal life after career plan
  • 56% felt they had a good idea of what their business is worth, yet only 18% had a formal valuation done in the last two years
  • 3 out of 4 business owners “regretted” the decision to exit the business
  • And the most shocking statistic – 80% of businesses valued at less than $50 million put on the market did not sell

An Eye on Exit Planning

From the moment you start or join a new practice, physicians need to be thinking about the long-term exit. Defining a compensation path, the type of potential buyer, and your retirement timeline will better prepare you for the future. Exit planning is a process, not a one-time event, so make sure to keep your long-term goals and financial future in mind throughout your career.

Benefits of Exit Planning

Exit planning is an ongoing process that should be prepared for long before leaving your practice. The benefits of having a successful exit strategy are continuous. Exit planning can help:

  • Control how and when to exit your practice
  • Minimize the taxes to put more money in your pocket
  • Place strategic options to choose from during any life event
  • Maximize value during good and bad economic times
  • Create peace of mind knowing your future is secure

A successful exit strategy can increase annual income and the value of the practice. It pushes the team to be the best-in-class and will serve the owner as a contingency plan. Non-solicited offers do happen, so it is important to have you and your organization ready to maximize value.

Exit Planning Process

Exit planning allows the practice owner to get actively educated on the process of how to transition their business. With a multi-disciplinary team of advisors working together, discussion of your personal, financial and business goals are aligned to your core values. All of your exit planning options and opportunities will be identified and you will be guided on development and implementation of the selected exit strategy.

Remember, exit planning is good business strategy, and a process, not just a single event!