Why You May Want to Consider a Practice Sale in 2019
- The potential change in capital gains tax. You may have read that Washington state is proposing adding a capital gains tax of 9%. California already has a capital gains tax of 13%. Other states are also considering either implement or increasing their capital gains tax rate. I don’t know if this is going to happen or not, I don’t have a crystal ball, but I suggest you talk to your advisers and get their thoughts on capital gains.
- Interest rates are starting to go up. The Federal Reserve just had an increase in interest rates. The interest rates on practice loans typically lag home loan rates by six months or so. We have had a nice run of low interest rates that have been below 5%. I expect they’ll be going up over 5% and probably end up between 5.25% and 5.75% on the high end.
- Corporate practices are becoming more active. We’ve been getting calls from some of the corporate practices such as Heartland and a couple others. They have entered the market and buying practices. They bought 10 in Washington and 7 in Oregon last year. They will be more active in the coming years. We have not sold a practice to them yet, but more buyers will help drive the practice prices up.
- Change in family leave law. This is a minor effect, but it’s an added tax to small business owners. They can choose to pass it on to the employees. I admit I haven’t studied this one to any extent yet, but it’s something to keep in mind.
- Uncertainty. Uncertainty is a scary thing. The economy has been going well, but how long will it sustain itself? The stock market is up and down like a roller coaster lately. In addition, we don’t know what the insurance companies will do with reimbursements.
These are a few things to consider if you’re on the fence about selling your practice. We are always happy to sit down and buy you a cup of coffee or tea and discuss your individual situation. Talking through different options always helps in making your decision. Best wishes for an extremely happy and healthy New Year!