Everyone who considers buying a medical practice approaches it from a different place, but most are looking to jump right into a full and growing business rather than spend years building one.
Over years of helping medical professionals buy and sell their practices, we’ve identified critical questions to save you time and money when buying a practice.
Get specific about what you want
Start with what you want before you go searching for what you can get. Doing this will change your mindset from one of “I hope” to “I want.”
Ask yourself these questions:
• What are the reasons you want to buy? Is it to jump right into practicing? To learn from a mentor and take over their practice?
• Do you have a specific area where you’d prefer to live and work?
• Imagine your ideal opportunity–How it looks, feels, the nature of the space, the number of treatment rooms. Is it a specialty practice? Do you have employees? How many days per week are you working, what hours?
• How much are you willing to pay? Practices are often sold like houses, with a down payment and the remainder paid over time. Do you have access to capital for a down payment? Do you have good enough credit to qualify for a loan? Even if the seller is holding the loan, they will always check your credit first.
Doing this self-assessment upfront will keep you focused as you compare practices and search for one that’s right for you.
Get specific about the opportunity
Once you have found a practice for sale that appears to match up to what you want, it’s time to zero in on the details of the transition.
While many first-time buyers simply reach out to the seller and say, “Hey, I’m interested,” it’s best to ask some very specific questions to get a clearer sense of how the transaction would work and if the seller is someone you feel good about.
The biggest concern for you, the buyer, is how quickly and easily you’ll be able to take over and turn a profit. Determine this by asking the seller:
• Does the practice have a specialty? Are the patients accustomed to certain treatments or techniques that you know or can learn quickly?
• Does the practice have room to grow? Ask the seller specifically for a few areas where they see potential.
• Does the seller have a timeline for leaving? How long would they be willing to stay on to train you and get you rolling?
• Is the space rented or does the seller own it? If it’s leased, is there some assurance that the landlord is willing to transfer the lease without any significant changes?
• What’s the transition plan for informing patients and introducing you? Attrition is a big fear for buyers, and the seller needs to address it.
• How was the value of the practice determined? A seller needs to be very specific because there are various ways to appraise a medical practice.
• Are they willing to give you financials to prove the value? You should be able to see, at minimum, the last three years of tax returns as well as profit and loss statements for the past two years.
• Do they have a plan for how much will be paid upfront and how much over a specific period of time? If you have good credit, are they willing to hold the loan?
• Will the seller allow you to shadow them for a few hours once or twice to get a sense of how their practice flows and how it feels to be there?
Your primary task in the beginning is to get a sense of the seller. If you decide to buy, worry less about the patients moving over and more about how you get along with the seller. Are they someone you feel you can work with and trust over several months or even a year?
What’s most important is making sure the acquisition truly aligns with your wishes and expectations. The rest is a negotiation. Asking the right questions will get you closer to finding the best practice for you.