/ /

  • linkedin
  • Increase Font
  • Sharebar

    5 tips to prepare for practice purchase

    So you want to be a practice owner. Do these things first

     

    2. Determine the type of practice you want to purchase

    Do you want to purchase a smaller practice for a low price and work hard to turn it into a full-time practice? There are several smaller practices coming onto the market as baby boomers are starting to retire. Several of these practices have annual revenue of only about $400,000 and can usually be purchased for under $250,000. With hard work and dedication, a young practice owner can grow the practice rapidly. In fact, I did that myself. I bought a practice grossing $375,000 a year, and within five years our annual sales were over $1,000,000.

    More practice management: How I prosecuted an embezzling employee

    If you prefer to not work so hard to turn around a smaller practice, consider buying a larger practice. While a large practice comes at a higher price, there is usually not much additional investments needed; a smaller, older practice often needs an office remodel and updated equipment. A large practice purchase is often structured as a junior partnership in which the younger partner slowly learns about practice ownership from the senior partner. However, large practices grossing over $1,000,000 can also be purchased outright just as a smaller practice.

    Ultimately, it comes down to the exit strategy for the seller and if he wants to remain working in the practice. Unfortunately, many young prospective buyers have been promised an opportunity to “buy into a practice” when they are hired on as an associate only to be led along for years with the practice purchase never coming to fruition. This happens for various reasons but mostly because the selling doctor overvalues her practice. The best way to avoid this situation is to have the practice appraised prior to ever seeing your first patient. The terms of the employment contract should include details of a possible practice purchase if/when it happens.

    In my experience, private practices are as unique as the owner. Each practice has its own personality, and the buyer (and his agent) should do his due diligence to dig deep and find out what the practice is truly like.

    Decide if you should hire an agent to help you

    Dirk Massie, OD
    Dr. Dirk Massie has two practice locations in the St. Louis metro area. He is the primary consultant at Premier Doctor Consultants.

    0 Comments

    You must be signed in to leave a comment. Registering is fast and free!

    All comments must follow the ModernMedicine Network community rules and terms of use, and will be moderated. ModernMedicine reserves the right to use the comments we receive, in whole or in part,in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

    • No comments available

    Optometry Times A/V