By Margery Weinstein
Editor-in-Chief, Review of Optometric Business
August 11, 2021
Selling your practice is a huge decision in which timing can mean everything. Here are the biggest signs you are ready to look for a buyer, including how the right buyer is able to meet the needs prompting you to sell.
The Most Common Motivations for Seeking a Sale
“We see four primary reasons,” says Joe Terzo, Chief Development and Strategy Officer at AEG Vision, as he goes on to enumerate why optometrists most often reach out to his company with an interest in selling.
Lifestyle Transition: As navigating regulatory, reimbursement and continuity in staffing have become increasingly complex and challenging, some ODs have found running a business, in addition to seeing patients, has become too much of a burden, he explains. They would rather focus solely on patient care and partner with a group that will both support and optimize the operations of the practice. “We often find this adds fuel to their passion for patient care, while alleviating the burden of running a practice,” says Terzo.
Financial Opportunity: The industry has and will continue to see a substantial amount of consolidation, Terzo says. Chances are an OD has a classmate or two who has sold to a private-equity-backed consolidator. With so much interest in the space, ODs are able to capitalize on selling their practice for a high value today, especially versus historical standards. “We are currently in the hottest market in the history of the industry. Speculation around a potential adverse change in capital gains tax rates is likely to push prospective sellers to make the ownership transition in the short-to-medium term,” he says.
Retirement: Every OD will need a transition strategy eventually, so once some ODs reach a certain age, they plan to find the right partner to help them through the transition, Terzo points out.
Making an Impact: “We often find that partner ODs are seeking to align themselves with a group that will stand shoulder-to-shoulder with them as advocates for the optometric industry,” he says. “Partner ODs often have a great vision for advancing the industry and expanding /elevating the level of care. Joining a larger group can provide them with a platform to influence and carry out this mission.”
Contrary to the stereotype some may have of the OD who is ready to sell, Terzo says they partner with ODs in their thirties through their seventies, as each OD has their specific motivations for joining our group,” says Terzo. “We focus on ‘fit’ as opposed to age or a particular demographic. Those who are particularly focused on ‘life after ownership transition’ often align the best with our key value proposition.”
ROB spoke with two optometrists who both felt they were not yet ready to retire, but wanted to partner with a larger company that would be able to help them concentrate more on being a doctor and less on practice management.
Desire for a Secure Future While Continuing to Practice
“Selling to a company like AEG Vision became appealing as my original retirement plan took an unexpected turn,” says Thomas Arnold, OD, FSLS, who sold his Sugar Land, Texas, practice to AEG Vision in 2019. “I had a partner of 16 years who was buying into the practice by accumulating stock annually. The idea was that she could acquire up to 49 percent ownership of our corporation. When it became time for me to retire, she would buy out the remaining stock. This plan changed when her physician husband was offered the head of a department of a prestigious medical school on the East Coast. It was obvious that I needed a new exit strategy.”
A private-equity-backed seller presented at least one key financial advantage. The ability to receive one large lump payment for the practice while continuing to work as a doctor appealed to Dr. Arnold, offering him additional financial security. He would not have to worry about a practice partner pulling out of the plan to buy at the last minute, or the impact of unexpected life complications like illness, making it hard to sell. His future, and that of the practice, including his long-time staff, would be set while he would be able to continue practicing. It was the best of both worlds.
AEG Vision allowed Dr. Arnold to continue doing what he does best, in just the way his patients have come to expect while also standing firmly by the original sale offer presented to him. “I was impressed with the professionalism and integrity of the management of AEG Vision. They impressed me that they had no desire or intention of changing our practice modality or office culture. AEG allows practitioners to continue to practice in the highest standards of the optometric profession,” says Dr. Arnold. “At every step through the discovery and negotiation process, I found them to be forthright and honest. They kept every commitment on time and without prevarication. Further, the estimated practice value that AEG submitted in the Letter of Intent was the same amount that was paid at closing after the culmination of due diligence. This was an impressive statement of business acumen as well as honesty.”
Dr. Arnold has been able to continue honing and growing his scleral lens practice, one of his specialized areas of expertise. “Over the past nine years we have developed a specialty in medically necessary contact lenses with emphasis on scleral lenses,” he says. “AEG allowed, and even encouraged, me to continue to pursue my international speaking schedule, writing career and my role as a consultant to lens and equipment manufacturers.”
Meanwhile, Dr. Arnold is able to live life as fully as he is able to practice optometry. “Even though I am proud of my career and profession of optometry, as an individual, I am more than what I do for a living,” he notes. “Do we really take time to ‘smell the roses,’ take that family vacation, go to every kid’s baseball game and dance recital? Wouldn’t it be nice to be “just the doctor” without all the multiple hats that the private practitioner wears? For me, the answer was ‘yes.'”
Opportunity to Create Generational Wealth
For Brandon Blaker, OD, the decision to sell his practice was prompted by a financial analysis. Though only at the mid-point of his career, selling to a company like AEG Vision provided the opportunity for impressive long-term financial growth. “Understanding the benefits of money now and allowing it to compound over time,” Dr. Blaker said of a key motivation for selling. “I knew selling to AEG I would still make a livable wage while taking a multiple on my excess earnings and allowing time to take care of wealth building.”
The lump sum of money he was paid was ideal for making investments that can grow over time. “Being paid a lump sum of money for future years’ worth of work will be beneficial in the long-run, enabling me to invest the money.”
He said that selling far from retirement age presented great opportunity: “Knowing at a young age of 45 I could work and make great money and let my finances from the sale of my practice generate the generational wealth…when was the last time we received a pay increase in our industry?”
Equally important was the chance AEG Vision presented of partnering with a larger company he felt he could trust. “Every promise made has been a promise kept, and knowing that the company has a people first approach has been amazing.” Having this trust was essential to making the sale deal work for him, said Dr. Blaker. “The final negotiation of the contract is a process where you have to trust the people you’re working with,” he said. “You’re never going to be able to cover all the what ifs that you can think of when doing something like this and that’s where trusting the people you’re working with is so important, and understanding that everyone is making a good-faith effort to find a deal that works for both parties.”
Dr. Blaker remembers why he sold his practice every night when he gets home from work: “People often ask me, ‘Why did you sell your practice at such a young age with a growing and thriving business?’ My answer is simple: I’m only young once, my kids are only young once, and the time I have with my family is only going to happen one time. Knowing I’m financially secure enough to take extra time, vacation and do the things I want to do with my family without having to worry about work or finances, is invaluable.”
Margery Weinstein is editor-in-chief of Review of Optometric Business. You can contact her at: email@example.com
*Photo credit, top of page: Getty Images