For many optometrists, owning a private practice represents both a professional milestone and a pathway to greater autonomy and financial success. Insights from experienced optometrists highlight the considerations and challenges involved in purchasing an established private practice. Those preparing to meet with the owner of a local practice for sale often seek advice about key questions to ask, transition tips, and potential red flags.
This blog post summarizes that discussion, highlighting practical advice and lessons learned from those who have navigated the process.
Key Considerations When Buying a Practice
Due Diligence is Vital
Multiple experts emphasize the importance of thorough due diligence. This includes reviewing financial records with banks and accountants, understanding the practice’s liabilities, and consulting a lawyer for contract drafting and review. Establishing a firm timeline and having a letter of intent with a first right of refusal can protect your interests.
Asset Purchase vs. Stock Purchase
Many advise favoring an asset purchase over buying stock. The rationale is that acquiring assets helps you avoid inheriting any unpaid debts, liens, or potential medical liability cases tied to the previous owner. Although asset purchases may require re-credentialing and other administrative work, they reduce long-term risks.
Seller’s Role Post-Sale
Opinions vary on whether the selling doctor should remain involved after the sale. Some find that having the seller stay on part-time (e.g., one or two days a week) aids in patient transition and revenue stability, especially in the early phases. Others warn that lingering owners or toxic staff can create complications, suggesting a clean break might be preferable in some situations.
Understanding Practice Operations and Patient Demographics
Before committing, it’s critical to understand how the current practice operates. One experience shared involved filling in for a doctor and discovering a lack of medical billing, outdated or nonfunctional equipment, and a limited approach to patient care. Knowing these details helps you assess the investment needed to modernize the practice and align it with your vision.
Financial Investment and Potential ROI
Some practices may require significant upfront investment—$150,000 to $200,000 or more—to upgrade equipment like OCT and visual field machines. However, this investment can yield strong returns by expanding medical billing opportunities and improving patient care. Practices with high patient volume but outdated infrastructure can be especially lucrative if managed well.
Non-Compete Clauses and Legal Boundaries
For those currently employed under private equity or other entities, existing non-compete agreements can complicate matters. A 5-mile radius non-compete that nearly covers the practice for sale is common. Negotiating to reduce or remove non-compete restrictions during contract renewal can be crucial to avoid legal hurdles.
Final Thoughts
Buying an established private practice is more than a financial transaction; it’s a strategic career move that requires careful planning, patience, and savvy negotiation. Engaging with the current practice, understanding its strengths and weaknesses, and preparing for a smooth transition can set you up for success.
If you’re considering this path, take the time to build relationships with staff and patients, clarify your vision, and ensure alignment with the selling owner. While challenges like non-competes and necessary investments exist, the potential rewards—both professional and financial—make it a compelling option compared to starting a practice from scratch.
After you have purchased the private optometry business you might be interested in attracting customers to the store.