Succession Planning and Exit Strategies For Plastic Surgeons

David Staughton B.Sc.(Hons) CSP CCEO Practice Consultant

Succession Planning For Surgeons – Resources For Plastic Surgeon Practice Transitions and Exit Strategies

Mature Plastic Surgeons ask their colleagues and advisors about practice transition, succession planning and retirement plans. Whether you are 60, 65 or 70+, planning for the future of your practice is essential. START EARLY!

  • Want to plan your practice exit strategy?
  • Want to sell your plastic surgery practice in future?
  • Want to find a plastic surgeon for succession?

Here are some resources that can help.

SUCCESSION OPTIONS & EXIT STRATEGIES FOR PLASTIC SURGEONS

Most Plastic Surgeons take one of these 6 options for practice transition

  1. Find a Younger Plastic Surgeon successor to take over the practice (can take 3 to 5 years) – See Steve Look at Paradigm Search Group in USA.
  2. Join a Bigger Group of Surgeons near your location (that will provide Practice Management Services for you)
  3. Pivot from a surgical practice into a non-surgical medspa practice – Offer injectables & skin clinic services and act as an advisor for a decade
  4. Sell your practice to a Corporate Buyer or larger Rollup Group -usually funded by Venture Capital or Private Equity – usually prefer a surgeon group or busy medspa to a solo older surgeon.
  5. Sell your practice to an Academic Institution or Private Hospital wishing to expand into Cosmetic Plastic Surgery or Aesthetics – the new “Priv-ademics” model. see ARSA model below.
  6. Close Your Practice Down and Sell Your Practice Assets – database, website, domain or phone number – to another surgeon for a low price (refer your past patients to a colleague).

 

You could also sell your ASC / Day Surgery Centre to a Private Hospital Group if you own one.

 

GROUPS INTERESTED IN BUYING AESTHETIC PRACTICES IN AUSTRALIA

These groups are mostly consolidating Injectables / laser Clinics, Medspas, Dermatology or Cosmetic Physician Practices rather than an older solo plastic surgeon practice.

Nikki Katz is a clinic broker that may be able to help you sell your clinic or practice

 

GROUPS INTERESTED IN BUYING AESTHETIC PRACTICES in USA

 

USEFUL CONSULTING RESOURCES FOR TRANSITIONING OR SELLING YOUR PLASTICS PRACTICE

 

PRACTICE VALUATION METHODS FOR PLASTIC SURGEON PRACTICES

How Much is a Plastic Surgery Practice Worth?

The most valuable parts of your aesthetic practice are probably

  • your office building / consulting suite,
  • your operating room (OR) or Surgery Centre (ASC)
  • the Medispa part of the practice with a proven track record of consistent sustainable earnings.

These assets can be valuable based on your location and other similar industry sales.

To create value from your actual plastic surgery practice (patient database, equipment, I.P., fitout, goodwill) you will most likely need to spend 3 to 5 years finding and nurturing your successor surgeon buyer or working for your corporate buyer on a contract.

SELLING TO A YOUNGER SURGEON SUCCESSOR

A good solo plastic surgeon practice might be able to sell to a surgeon successor for about $250k to $1 million – paid over time.

The surgeon purchaser typically starts as an associate on a salary for 2 to 3 years then

SELLING TO A CORPORATE GROUP

A corporate buyer or platform wants to buy a sustainable future income stream – based on the surgeons continuing to work in the practice.

  • For a solo surgeon this might be your adjusted EBITDA times a set multiple – say 3x to 5x EBITDA – depending on your age, keyman risk, systems, I.P. location and surgeon contracted salary arrangement etc
  • For a group practice the EBITDA multiple may be higher – say 4x to 7x EBITDA – again depending on the number of surgeons, risk, systems, unique I.P., location, past income,  Brand reputation, and contracted surgeon arrangements.

Your practice EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) will be affected by

  • The surgeon contract that you sign and it’s surgeon fee arrangement, inclusions/restrictions. For example, in the USA,  you might agree to be paid 25% to 40% of your surgeon fees. In Australia, maybe 50 to 60% of your surgeon fees.
  • Taking out any of your personal expenses – travel, motor vehicle, phone, laptop, insurances etc etc
  • Staff Liabilities – accrued holiday and leave pay for example

A corporate buyer will most likely pay much more for your practice than a surgeon successor (maybe 2 or 3 times as much) but will typically

  • require a LOT of detailed Due Diligence to ensure the accuracy of your financials and QOE report and identify any potential risks.
  • take over full control of the practice and make many changes (some that you will disagree with)
  • aim to reduce expenses and run the practice much more efficiently
  • reduce corporate risks by implementing stricter financial controls, software and operational policies

Be aware that the corporate representative who makes promises and negotiates the sale of your practice is most likely NOT the one you will end up working with on a daily basis. Make sure that everything you want is written in the contract. This may include non-compete clauses, use of photos and reviews, limits on travel for conferences and specifically what happens if the platform fails or sells to another group.

You will most likely be offered a combination of cash and shares in the purchasing entity. For older surgeons, your peers will probably advise you to take a bigger cash component (less shares in the entity).

If you want some more ideas about Practice Succession or Lifestyle Retirement options – please contact Dave Staughton for a chat about your options

REFERENCES ABOUT RETIRING & PLASTIC PRACTICE SUCCESSION PLANNING

REFERENCES ON AN EXIT STRATEGY AND SELLING YOUR PRACTICE

USEFUL BOOKS ON SUCCESSION PLANNING & PRACTICE TRANSITION

How much is enough By Arun Abey and Andrew Ford