Photo courtesy of Dr. Christopher Lopez, who is pictured here with practice partner Craig Sylte, OD. Dr. Lopez recommends crunching the numbers to determine the best strategy to buying into a practice partnership.
Keys to buying into a practice partnership successfully
By Chris Lopez, OD
June 4, 2025
For many associate optometrists, the dream of practice ownership is a natural progression of their career. Buying into an existing practice, rather than starting from scratch, offers the appeal of an established patient base, operational infrastructure and immediate cash flow.
However, the process is nuanced and requires thoughtful preparation, negotiation and partnership-building. Here’s what associates need to know before embarking on the journey to practice ownership.
Why Partner in the First Place?
ODs may ask themselves why they would want to buy into a practice as opposed to cold-starting or buying a practice out completely. Partnering into a practice can be an attractive option because rather than building from zero, an associate can leverage:
- An Established Reputation: You can inherit a practice with loyal patients and goodwill that can take decades to build.
- Immediate Cash Flow: Partnering into an established practice leads to immediate revenue from the day you buy in.
- Mentorship and Support: There is value in joining an experienced owner that can provide mentorship.
However, not every opportunity is created equal. Success hinges on careful vetting, open communication and a clear, mutually beneficial agreement.
Understand the Buy-In Structure
There are a variety of buy-in structures that eventually lead to full ownership or a long-term partnership. Common structures include:
- Gradual Buy-In: The associate purchases incremental ownership stakes over a designated period of time (e.g. 10% per year).
- Immediate Equality: The associate buys half of the practice upfront (i.e. 50%).
- Earn-In Model: The associate earns equity through tenure and/or performance.
Each model has its pros and cons depending on the financial status and risk tolerance of both the buyer and seller, and the seller’s timeline for exiting the practice.
Due Diligence
Before discussing numbers, associates must perform due diligence to assess whether the practice is truly a good investment. This is a crucial step in the ownership transition process! Key areas to evaluate include:
- Financial Health
Buyers MUST request and review at least the past three years of financials, including:
- Profit and loss statements;
- Balance sheets; and
- Tax returns, among others.
A healthy practice should show consistent profitability, stable or growing revenue and manageable overhead. Look for any signs of declining collections, increasing staff and cost of goods sold (COGS) expenses or heavy debt burdens.
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- Patient Base and Demographics
Analyze the patient demographics:
- How many active patients are there?
- What is the average revenue per patient?
- Do most patients have vision discount plans, medical insurance or are they private pay?
- Does the demographic consist of blue-collar patients, white-collar or a mix?
Cash-pay patients are usually more valuable than those with poorly reimbursing vision discount plans.
- Practice Operations
Understand the staffing model, EHR system and technology investments. A practice that is disorganized, overly reliant on the selling doctor, or heavily outdated, may require significant investment post-purchase.
- Culture Fit
Beyond numbers, assess cultural compatibility. Do you and the existing owner(s) share similar clinical philosophies, patient care standards, financial motivations and business values? A misalignment can lead to conflict and derail even the most lucrative opportunity.
Valuation: What Is the Practice Worth?
A professional third-party valuation is critical. Factors that typically drive value include:
- Net income
- Equipment
- Tangible assets
- Goodwill (the intangible value of the patient relationships and brand)
- Growth trajectory
It’s important that the net income is normalized for a fair market salary to the owner. Too many owners play funny number games with their salary to manipulate the net revenue of the practice.
A few of the common valuation methods are:
- Income-Based Valuation: Based on income and expected future earnings.
- Market-Based Valuation: Based on comparable recent sales of similar practices.
- Asset-Based Valuation: Based on the value of the practice’s tangible and intangible assets.
- Hybrid (Weighted) Valuation: Blend aspects of the income, market and asset-based approaches to provide a balanced perspective. This may be especially useful when there’s uncertainty about which method best reflects the practice’s true value.
Buyers can expect to pay an average of different valuation strategies or a multiple of the practice’s adjusted net earnings. Some people recommend calculating the EBITDA (earnings before interest, taxes, depreciation and amortization) and paying a multiple of this value. Individual ODs often pay 2-4x EBITDA, whereas private equity pays significantly more.
Financing Your Buy-In
Unless an associate has significant savings, they will likely need financing. Common options include:
- Traditional Bank Loans: Many banks offer specialized health care practice loans with favorable terms to optometrists.
- SBA Loans: Small Business Administration loans can help new owners with low down payments, but involve more paperwork, and approvals can be a lengthy process.
- Seller Financing: Sometimes the selling doctor agrees to finance the purchase directly, allowing you to pay over time with interest.
It’s important to work with a lender experienced in optometry transactions, as they understand practice-specific risks and metrics. Most banks view optometry as a relatively safe investment.
Many consultants advise sellers against seller financing as they prefer their clients to receive a full lump sum from the buyer via a bank loan. However, for large practices and/or buyers with low cash reserves, seller financing may be the only viable option to allow a young associate to buy into a practice. There are many nuances to this option that are beyond the scope of this article.
Legal Considerations
A buy-in requires well-structured legal agreements, including:
- Buy-In/Partnership Agreement: Specifies the terms of your purchase, including price, percentage ownership, payment terms and contingencies.
- Operating Agreement (or Shareholders Agreement): Governs how decisions are made, profit distributions, partner duties, dispute resolutions and exit strategies.
- Employment Agreement: Even as a partial owner, you may still be an employee of the company. Ensure your employment contract reflects your new role and responsibilities.
- Non-Compete and Non-Solicitation Clauses: These restrictions often are more exacting once you become an owner.
Hire an attorney familiar with optometry practice transactions to draft and review these documents.
Negotiating the Deal
Negotiation should feel like a collaboration, not a battle. Tips for success include:
- Be Transparent: Clearly communicate your goals, expectations, future plans and timeline.
- Focus on Win-Win Solutions: Come to terms that are agreeable by both parties without making one feel shorted.
- Exit Strategy: Have the end in mind. Outline what the senior owner’s future exit strategy may look like and if that aligns with what the buyer desires.
Key Questions to Ask
Here are just a few of the questions that potential partners should discuss during the buy-in process. Some of these may be uncomfortable but they’re important:
- What happens if one of us dies?
- What if one of us wants to exit the partnership?
- What if I want to leave during the buy-in process in a seller-financed deal?
- What if one of us begins under-producing?
- What if one of us will dedicate more administrative time to the practice?
- How are decisions made if we can’t come to a mutual agreement?
- What if one of us wants to expand and the other doesn’t?
- What if one of us wants to sell to private equity?
Setting Yourself Up for Success
Once the deal is done, work on transitioning from an “associate” to “owner” mindset:
- Engage in Leadership: Take an active role in staff management, operations, marketing and business strategy.
- Retain Patients: Build relationships proactively to ensure patients view you as a stable, trusted part of the practice.
- Respect the Legacy: While you may want to implement changes, respect the systems and values that made the practice successful.
Long-term success comes from balancing fresh ideas with honoring the foundation you’re building upon.
Final Thoughts: A Rewarding But Complex Process
Buying into a practice is one of the most rewarding — and complex — moves in an optometrist’s career. With thorough preparation, transparent communication, and expert support, associates can transition smoothly into ownership, creating professional autonomy, financial security and the opportunity to build a legacy of their own.
While the process may seem daunting at first, remember: every successful owner once stood where you are now. With the right plan, buying into a practice can be the start of a fulfilling and prosperous chapter of your career.
Read another article by Dr. Lopez
Christopher Lopez, OD, is a practicing optometrist and Career Director at ODs on Finance. To contact him: christopher.lopez.2013@gmail.com
