By Greg Auerbach, MBA

Last month, we looked at the capital gains rate, the possible change with a new administration and the ramifications to, primarily, the seller, on the sale of his or her practice. With Election Day literally right around the corner, the economy itself is still in a state of flux not only due to the market forces themselves – housing, energy and trade, but also because of the election itself. The seller, though, is not the only one affected in this time of uncertainty and, it may be the best time for a buyer to take advantage of just that.

On the purchaser’s side, the most concerning part may not necessarily be in the tax implications discussed last month, but, more so the seller’s decision to transition now or transition later. In considering that point, there is a misconception that we are in, or will soon be entering into a buyer’s market – with more sellers than buyers. While the long term statistics from our own research and the ADA may indicate this nationally, within the state of Florida and, most specifically, on the west coast of Florida, this is not and will probably not be the case in anytime in the near future. A good quality practice with a strong cash flow will sell, sometimes with multiple offers.

Why is the market not changing as quickly in Florida? First, there are many purchasers looking for the same thing as you are right now. Second, sellers are holding on to their practice as uncertainty levels in the economy, stock and housing markets and election remain high. Third, smaller practices are either being purchased as satellite offices by current practice owners, part-time opportunities for somebody who does not want to practice as much, merger purchases to increase a current practice’s patient base or simply being shut down. While these offices are considered future listings, they are not necessarily viable opportunities for the majority of the market of buyers and constrict the real market availability.

So, as a buyer, what can you do? Look now for the good practices – even if they are not in the specific location that you would most desire. This may include looking at practices just outside of the urban areas within a 30-45 minute commute. If that is not viable, be prepared to pay for a quality practice when it comes available, as nobody can predict when the next great listing will come along. Overall, resist the uncertainty that the economy is currently breeding. Practices statewide are, at best, stable, but more commonly down ten to twenty percent, or more this year. This decline, like others we’ve experienced, though, is due to the state of the economy and should rebound as the down cycle levels and then turns positive – leaving you with the benefit of delayed work and patient need for treatment.

Specifically as it relates to administrative policy, though, note that both candidates are keenly poised to “fix” the economy. With that, look to not only see patients coming in for the delayed treatment, but possibly cash rebates to consumers and investment incentives for business owners. Write-offs for new equipment may even be accelerated which could allow for an advantageous environment to replace older chairs, purchase new technology or take the steps to go paperless. Combining these incentives with the possibility that a seller may be further motivated to sell before a tax law change could result in a boon for you and a kick start to your private practice career.