Getting to grips with the commercial and human dimensions of making the decision to sell your optical practice
Anil Mahay joined Myers La Roche as a trainee analyst and business consultant in September 2021.
He is a graduate in Business (BA Hons), certified in Management and Problem Solving (CMI Level 5) with existing experience of the optical sector via a prior role at the Royal Manchester Eye Hospital.
ANIL: In your experience, why do owners sell their optical practices?
The reasons for practice sales are wide and varied. Sadly, many are negative – such as disputes between business partners, divorce, health issues, and probate.
Many owners find running an optical business stressful at times and a practice exit offers the hope of an easier life. When younger owners cite stress as the catalyst for them to be thinking about selling, experience has taught me that I have a major duty of care to ensure that a sale is truly the right course of action for them. Often given a little time and the right intervention, pinch points such as staffing problems or the hassles of IT compliance issues [making tax digital, EGOS, etc.] can be overcome allowing the business ownership experience to revert to a happier and more lucrative once again.
There are lots of positive reasons for sale too. Over the years we have facilitated numerous sales to enable younger owners to relocate and enjoy new adventures and experiences overseas. By far the most common positive reason for sale is retirement [or semi-retirement.] The funds raised from the sale of a practice can be the final part of achieving financial independence for many owners. And with the prices that profitable practices achieve improving, for some this may be possible at a surprisingly young age.
ANIL: What are the exit options for optical practice owners - and what tends to be most prevalent?
There are a whole spectrum of possible exit options and over the years I have been asked for my opinion on some truly weird and wonderful arrangements involving the sale of minority stake holdings internally with future options to purchase additional shares. In terms of ‘internal’ sales, management buyouts in a single transaction are the most typical. However, by far the most common transaction is an outright sale to a 3rd party, and whilst payments are sometimes structured, the vast majority of deals we are involved in are full cash on completion for the full issued share capital.
Whilst we still continue to be approached by venture capitalists and other non-optical sector businesses potentially attracted by the high margins within dispensing optics, very few of these conversations ever come to fruition.
[Although it should be noted that external investment is currently supporting the rapid expansion of some of the high profile acquisitive optical chains.]
For some owners, selling their practice is one thing, but letting go maybe another. An emotional attachment built over many years and the investment of blood, sweat, tears; heart, and soul. For some, it may be like giving part of themselves away. Many liken it to the emotional experience of struggling to come to terms with their last child leaving the nest. However, despite the emotional angst, it is important to focus on the positives that lay ahead, the next chapter into your life, it's time to enjoy and go after your undiscovered journey – a new focus.
ANIL: What advice would you give to someone beginning to think about selling now or in the near future?
Don’t just talk about it, until something forces your hand. Ignorance is not bliss. Be proactive. Get properly informed. Invest the time in ensuring you chart the right course. It is a galling fact that many practice owners spend more time choosing their next car than they do figuring out the best way to prepare for and to execute the sale of their practice and life plan – yet the magnitudes of ROI and life impact are so much higher.
ANIL: What advice can you give to let go once the sale has gone through?
Having a structured, informed exit plan in place - such as via Myers La Roche’s
Exit 360 PathfinderTM service may have already involved you reducing input into your practice prior to the sale over a number of years and having a clear view of how you will spend your time post-sale If it did not, it is generally not a good idea to have been working flat out and then to suddenly stop. For this reason, a period of paid part-time post-sale clinical consultancy for the new owner is normally a good way to transition the business for the benefit of both parties. But for everyone, there is ultimately a time to let go.
Despite Covid, we live in unprecedented times with opportunities for leisure and lifestyles that our ancestors could never have even dreamed of. I have clients who have gone on to become artists, authors teachers, and preachers. In my experience, most business owners have a latent desire to do something that time has prevented them from doing during their core career years. Have a really good think about what yours is, throw yourself into it, stay busy and you never look back.