Many optometrists find that the end of their practice is more difficult to face then once imagined. The end of practice stares the reality of life in the face. How did time go by so fast? Nostalgic feelings of days when the optometrists dispensed glasses. As you approach your final years, having a strategy to transition into retirement will ease the stress of those final days. As small business owners we have opportunities to position ourselves to enjoy retirement to its fullest. Here are four reasons to strongly consider financing the sale of your practice.
- Quicker Sale – With the current economy, money is more difficult for the buyer to obtain, especially when the buyer has large student loans (average
$130,000) and typically substantial consumer debt. When you are advertising your practice for sale (Optometry’s Career Center) or advertising for an associate with an option to buy-in, make sure you state seller financing is available. The amount and specifics of the financing can always be negotiated later. - Increased Purchase Price – A seller has more negotiating power and the right to ask for a higher price when seller financing is involved. When I first purchased share for Wichita Optometry, P.A., I was given the option to purchase all shares at one price through outside financing or to purchase all shares at a slightly greater price which was financed by the partners. It was not a difficult decision for me to choose to have the purchase seller financed. For me, I wanted the partners to “have skin in the game.” They knew that the higher price did benefit them, but if they were not a part of making my practice successful it would ultimately impact them financially. It was a win-win.
- Residual Interest Income – If you choose to finance the purchase, you will receive interest above the purchase price. The interest is usually dependent upon the current commercial rates. This can be a nice part of your retirement income.
- Limit Tax Liabilities – You first need to visit with your CPA to assist you in the tax implications of a practice sale. By not taking the total purchase price
upfront, you will spread out the tax liabilities over time. This is usually a benefit to the seller but needs to be reviewed and discussed with your CPA or a CPA familiar with optometry, veterinary, or dentistry practice sales.
Selling a practice can be a very stressful time of your life. The small business optometrist who plans strategically for their exit will find exiting to be very rewarding and less stressful. Change is never easy, but intentionally planning how the sale of your practice will occur can make stepping into retirement a reality.
