Buying an optometry practice is the dream for many professionals in the optometry industry hoping to take full control over their careers. Optometry practice ownership can unlock a high-profit margin and ultimate job satisfaction when executed successfully. If you’re a doctor hoping to advance your career by becoming a practice owner, you’ve come to the right place.
At Weave, we provide comprehensive optometry practice software designed to encourage practice growth, high cash flows, and excellent satisfaction rates through streamlined internal and external processes. Read our guide below on how to purchase an existing practice, then learn how to become a successful business owner at your new clinic with our optometry software.
Advantages of Buying an Existing Optometry Practice for Sale
The benefits of purchasing an existing optometry practice rather than building one from scratch include:
- Fully developed infrastructure and equipment: An established optometry practice will already have the equipment and inventory you need, from chairs to eye exam equipment, contact lenses, and glasses.
- Instant cash flow: Because you’re focusing on practice acquisition with existing facilities, you can reduce downtime and immediately begin turning profits. Assuming you conduct your due diligence, you should be able to find a private practice with established patients so you can quickly earn enough to repay your small business administration debts.
- Experienced staff in place: By purchasing an existing private optometric practice, you can often retain most of its current staff members, allowing you to skip the pain of recruitment. Experienced providers who are members of the American Optometric Association (AOA) won’t require too much training or onboarding.
- Developed market: When you purchase an existing clinic, you can view its previous performance metrics in its local market to gauge how your practice in that location will perform.
The advantages above are real, but don’t come without hard work. Also, purchasing the right practice in an ideal environment for your financial goals takes planning, which we’ll discuss next.
Steps To Take Before Buying an Optometry Practice
Potential buyers have substantial research work ahead of them before beginning the optometry practice hunt. We recommend breaking the process up into the following steps:
- Assess your financial readiness: Purchasing any business is a large financial decision that you should not take lightly. You must consider your current financial situation, potential future burdens, and ultimate financial goals. You can meet with a financial advisor for guidance.
- Determine your preferred location: After creating a budget, select your ideal location. You need to conduct a thorough analysis, researching practices in the area to determine average profit flows, staffing access, operating costs, and more.
- Identify the type of practice you want to buy: Many types of optometry practices exist, including sports vision, pediatrics, neuro-optometry, senior care, vision therapy, lens care, aesthetics, and more. Consider what you want your practice to specialize in, then which features it will need based on that specialty.
- Research clinics for sale: Now that you know your budget, location, and preferred practice specialty, you can begin researching clinics for sale. You can work with a professional broker or agent for support during your search.
- Narrow your options: When narrowing your options, you need to keep your best interests as a buyer in mind. You can weed out sellers by looking for red flags. Avoid sellers who aren’t willing to budge on price, don’t know what their practice is worth, want to drag out the deal, or don’t seem fully committed to selling.
Conducting Due Diligence
Due diligence is a necessary step before purchasing any business as it ensures that all financial, legal, and operational aspects of the transaction align with your vision. Once you’ve found a practice you’re interested in purchasing and can agree on basic terms with the seller’s practice broker, due diligence will be your next step.
Your team of lawyers and accountants can help you through this process, though in general, you should review the following items:
- The practice’s external and internal appearance: Consider the parking lot, external signage, building material conditions, nearby roadways, access to popular destinations, surrounding businesses, and the overall neighborhood. On the inside, examine the layout, how patients will flow through, how well the AC and heaters function, and any required renovations.
- All equipment conditions: Review and examine all major equipment to determine what you will need to purchase or replace.
- The practice financial statements: Previous revenue and financial statements can provide a more accurate practice valuation.
- Previous tax returns: Your advisor can help you examine tax returns to ensure that the business has a clean slate with the IRS.
- Debts: You need to understand the practice’s existing debts before purchasing, so be sure to research all lines of credit in advance.
- Supplier relationships: If you wish to continue using the same suppliers, meet with each one to establish terms.
- Employee relationships: Consult existing employees to determine which ones wish to stay after the purchase and under what circumstances or terms.
- Employment agreements: Staff members may expect to retain their existing salaries, benefits, or other agreements.
- Lease terms: If the building is under a lease, you need to examine the lease terms from the building owner to understand your responsibilities, payment requirements, and terms.
- Insurance and licensing information: Medical practices require specific insurance and licensing. Verify that the building and staff members have the required credentials.
- The practice’s reputation: Regardless of its owner, the practice’s local reputation will impact its success rate. Research reviews online or speak with other practices in the area to ensure that you’re buying a well-renowned practice.
- Purchase terms: You must carefully review all purchase terms with your legal team and accountant to ensure that you understand your financial commitment and timeline. Be sure to negotiate any issues you locate rather than agreeing to them on the spot.
Financing Your Purchase
Before making an offer or funding your purchase, you need to assemble a team of professionals who will support your legal and financial best interests. Consider hiring a business transaction attorney who can review all documents, a Certified Public Account (CPA) to guide you through setting up the finances for your business (like profit and loss sheets, statements, etc.), a lender to finance the purchase, and a trusted advisor for additional support.
The primary types of funding you can consider for your optometry practice investment include the following:
- Personal savings
- Investments from friends or family members
- Investments from individuals or companies
- Government funding for small start-ups
- Bank loans
When applying, securing, and negotiating funding on a business loan, research the lenders first and shop around to find your best options. Prospective buyers should keep in mind that certain loans will require collateral in the form of tangible assets. Read terms carefully and consider whether or not you’re willing to place an asset at risk.
Closing the Deal
After securing funding, you can move on to closing, which involves more due diligence and legalities. A few of the top legal documents and processes you should complete with your legal team include the following:
- A Letter of Intent
- A Non-Compete Agreement
- Confirmatory due diligence
- The Purchase Agreement
- Financing terms
- Lease Terms with your landlord
- An Employment Agreement if the seller intends to continue working at the practice
- A Purchasing Entity
- Pre-closing steps
- Purchasing insurance and licensing
- Establishing bank accounts
- Creating an HR team
- The Bill of Sale
- A Security Agreement
- A Promissory Note (if held by the seller)
- An Assignment and Assumption Agreement
- A Settlement Statement
- An Assignment and Assumption of Lease
- An Escrow Agreement
- All Bank documents
Managing the Newly Acquired Private Optometry Practice
How you manage your new practice will directly impact its success. As the owner hoping to see successful profit streams, focus on the following areas:
- Hiring or retraining personnel: An optometry practice cannot succeed without highly trained, experienced, and motivated staff. You can either hire new members or train who you have to fulfill upgraded roles, like offering continuing education to an associate optometrist.
- Improving marketing and branding: After your new practice changes ownership, you should refresh its branding and marketing efforts to let patients know they can expect an enhanced experience.
- Implementing time-saving tech: Successful client experiences involve fast wait times, easy communication, dedicated providers, and in-depth care experiences. You can provide this level of patient care by implementing comprehensive Optometry Management Software, like Weave. With Weave, you can automate your email marketing, payment collections, patient scheduling, and more all at once, with the opportunity to support multi-location management and team communication if you choose to buy an additional practice.
- Building relationships with clients: At a private optometry practice, patients expect a level of relationship-building with their providers. Be sure to foster this connection after the practice transition.
- Managing finances: As your business collects and uses funds, you need to manage all accounts according to the financial advice you gained during the purchase process.
- Setting goals: Now is the best time to consider business plan objectives for the practice. What do you want the revenue to be by the end of the year? How many new patients do you want to attract, or do you want to increase your average ratings?
Buying an optometry clinic takes time and many steps, but follow this guide and you’ll be well on your way. Also, don’t forget to schedule a demo to see Weave in action or call us at 833-572-2139 with any questions.
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