The ease of selling a product is inversely proportional to the cost of the product. If a patient at your practice wants to buy a bottle of ophthalmic lens cleaner, no one is concerned whether the individual can pay for the $5 bottle. However, if a patient is buying three pairs of sunglasses with all the additions, some may be concerned about the patient’s ability to pay for the total bill.
Now let’s take that to extremes and look at a potential buyer of your optometry practice. Most optometrists who own a practice assume when they are ready to sell, a qualified buyer will come along and buy it. Think again. Buyers are having more and more difficulties putting together resources to purchase a practice, and the larger the practice the harder it is. And even if someone can buy the practice, will he or she be able to manage the financing for you to receive the payoff?
When you are ready to sell, ask yourself these three questions about any potential buyer.
- Is his or her financing complete? – Many practice sales have dissolved due to the inability of the buyer to get financing. If a buyer can only come up with 80 percent of the financing, you may consider financing the remainder. Please do remember that if you do this the financing agency (i.e.- bank) will get paid in full before you do.
- What is the buyer’s lifestyle? – Look at the history of the buyer and and his or her credit rating. Have loans been paid back? Has a school loan ever gone into default? Does his or her taste of vehicles, housing, and vacations indicate being highly leveraged? If so, you may consider clicking “next” on the buyers page.
- What kinds of relationships does the buyer have outside of the practice? – This directly relates to an associate OD that you are considering going into partnership with to buy your practice out. A friend of mine once said, “The most common theme about an individual who has multiple divorces is that individual.” Before agreeing to financially “marry” a potential buyer, remember that the integrity of an individual outside of the office is directly related to integrity inside the office.
Many sellers are so excited at the prospect of selling their practice that they overlook various red flags in the process. This is why all optometrists looking to sell their stock in the corporation should begin the process at least three to five years prior to exiting. Don’t assume your practice will be sold and you will receive all your finances from the practice. Start early for the best chance of finding a reliable buyer.
