July 17, 2019
Mark Wright, OD, FCOVD, ROB Professional Editor outlines the critical issues and strategies for a successful practice transition. From a seller’s perspective, it is vital to maximize the value and net profitability of a practice and to build value over a career timeline. From a buyer’s perspective, the practice needs to be profitable or have the potential to enhance profits with the application of a feasible growth strategy. An in-depth discussion with Roger Mummert, ROB Content Director.
SET A SALE PRICE UP FRONT. If you plan to eventually buy a practice you are working in, agree on the sale price up front so you don’t work against yourself, increasing the value–and price–of a practice you are working in before buying it.
BOTH SIDES SHOULD FEEL IT’S FAIR. It’s OK if neither side feels they are getting everything they wanted; if both sides feel the price is fair, the deal likely will work out.
BEWARE OF CONTRACTUAL GUARANTEES OF EMPLOYMENT. Avoid making contracts that require you to keep one, or more, employees on staff after the sale. You want the freedom to terminate employees whose performance does not meet your standards or those of a future buyer.
CHECK YOUR CREDIT. Buyers with poor credit and ample debt may find the deal slipping away as a purchase nears. Check ahead of time that you have an adequate credit score to be a buyer.
WORK TO ACHIEVE FINANCIAL FREEDOM. Consider the long-range implications of a sale. The purchase price may seem high–but does it equal the practice value you build up over many years? Does it suit your career timeline and provide you financial freedom?
Mark Wright, OD, FCOVD, is Professional Editor of Review of Optometric Business. Contact: Mwright@pathways-o.com.
Roger Mummert is Content Director for Review of Optometric Business. Contact: Rmummert@jobson.com.