Tips for Selling a Midwifery Business

Having your own midwifery practice is one of the most fulfilling parts of being a midwife. There are so many benefits to years of planning in advance for selling your practice. Time is essential to get the best price and find the right person to take over your “baby.” However, after a few years or even decades of having your own midwifery practice, you may decide to sell your midwifery practice versus closing to continue the legacy and make a smooth transition for the community. 


So what does it take to sell your midwifery practice? What are the things that you should consider? Do you just sell it to someone you know? How much time is needed for planning and closing a business sale? Sometimes it feels like there are more questions than answers at this stage of your practice’s transition.

Selling a Unique Midwifery Practice is not as Easy as it Seems. 

It takes a lot of time, research, and study, even learning the business laws that may be involved. Therefore, deciding to sell your own midwifery practice is a huge disposition anyone can make. However, with persistence, attention to detail, and willingness to be objective about the actual value of practice. You not only can reap the financial rewards of selling your practice but also know the community has a strong midwifery practice to continue serving them. With the rising demand for midwifery around the US, it is indeed easier for one midwife to sell her practice to another versus just “opening up shop.”

Here are a few tips you should consider when selling your midwifery practice:

1. Research Prospective Buyers

Trust is a valuable instrument in selling a practice. You don’t want to sell your practice to a person whom you can’t trust. It is indeed important that you already have someone in mind who is capable of continuing your vision and mission to the community. In finding the right buyer for your practice factors such as reputation, available funding, practice philosophy, and business management skills are very important. A competent successor ensures a good transition for clients to get safe and valuable services still. It doesn’t necessarily have to be a midwife, but a business owner who UNDERSTANDS midwifery and can continue the midwifery model of care with the hired staff.

2. Plan Early

If you can take years of preparation in selling your practice, finding the right buyer, having them do their due diligence, and negotiating an offer. Planning is crucial right from the moment you consider selling your practice. If you want to retire in three years versus three months, it makes finding a buyer and getting the best value from your business happen. Motivated sellers don’t get much more than the value of building and supplies when time isn’t on their side.

3. Know the Financial Value (Not Emotional Value) of Your Practice

Knowing the value of a practice is challenging because the value is based on tangible and intangible assets. If you choose to value practice strictly on profitability (the easiest way to estimate the value of business), most midwifery practices won’t look very “valuable on paper.” When you start valuing the building, supplies, insurance contracts, established clients, birth center accreditation, and marketing campaign to more of a replacement cost if someone else tried to do the exact same thing, then the value goes way up.

 The bottom line, if your practice isn’t making money, prospective buyers aren’t going to want to buy the business. They will only want to buy your location and supplies at the wholesale rate since the business itself won’t be a profitable investment. The need for midwifery services based on demand and safe care being provided has unfortunately no financial value to the potential buyers. An independent medical practice appraiser like Midwifery Business Consultation can help you objectively value your business based on the following factors:

  • · Tangible assets — birth center, office clinic, equipment, & supplies
  • · Intangible Assets — established clients, reputation in the community, insurance contracts, trained staff, location near hospital, collaboration agreements, policies and procedures, birth center accreditation and licensure, & profitability
4. Consult with the Right People

In selling your midwifery practice, consulting with the right people is the best decision that you can make. Leverage the experts around you. We are good at being midwives, not selling businesses. Meet with your legal team like a lawyer, accountant, and financial planner to see what tax implications are to think about when selling practice for cash and gain taxes all at once versus being the business loan provider for the seller and slowly getting paid overtime plus interest. These people can also help you handle legal and financial issues, comply with any state laws governing the sale of your practice, and evaluate your insurance needs as you wind down your involvement in the practice. Remember, you are selling a practice. Having someone who can give you the best advice involving financial matters and assists with selling businesses regularly is crucial to protecting your business and your financial future.

4. Protect Your ASSets

In every negotiation, protecting the interest you have placed your sweat and tears into is a must. Many prospective buyers will try to decrease the value you set upon your practice. Be objective and create a win-win situation with the buyer. When time is on your side, you can pass on one deal and not feel pressured that others aren’t coming around before retirement. Consult with your lawyer to ensure that appropriate protection clauses are included in the final sales contract, such as a clear definition of the seller and buyer’s role in the transition, the seller and buyer’s financial responsibilities, and protections against breach of contract.

5. Know the tax consequences

Taxes have a big impact on how much you ultimately earn from the sale. Careful planning is the key to reducing your corporate and personal federal and state tax liability from the sale. Consult your tax advisor for assistance.

The most fulfilling part of selling your midwifery practice is the continuation of the legacy, philosophy, and its service to the community even if that means that you are no longer the owner of it. Some may still work in the practice for transition purposes and business consulting support, while others choose to retire and just focus on their lives by exiting involvement with the midwifery practice they just sold.

Anytime you are considering selling your midwifery practice, there are key tips are want everyone to take away: giving time, hiring the experts, creating fair value for practice, and negotiating a win-win situation for you and buyers. We need to keep these amazing midwifery practices alike for the future generation of families to enjoy. Buying an established midwifery practice has far higher success rates than another midwife just starting from “scratch” with their practice. We need to keep this midwifery momentum strong and the clinical and business knowledge needs to be passed on.

There are many midwives who plan to start a birth center and very, very few who successfully sell their practice for a profit. There are dozens of midwives each and every year who don’t have a strong exit strategy for leaving their business model. When planning of sales doesn’t occur, the community loses a massive service. The midwife loses a retirement income stream and the opportunity to pass on her knowledge to the next generation of midwives.

There are many great ways to find out what a business is worth, what the timeline of the exit strategy of selling their share of the midwifery practice is, where to find the right buyer, and tips to negotiate that win-win situation between each party. I created a step-by-step tool and guidelines to help midwives value their practice, understand a realistic timeline of selling a business and negotiating tools available to make both parties very happy with the transition from prior to new owners. Come join us on Saturday, October 9th from 3:00 PM to 4:00 PM at AABC Birth Center Conference to learn more about birth center selling strategies.

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