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<\/h3>\n<\/h3>\nWhen buying or selling a practice, you need the right people resources in place. Here is a winning-team checklist.<\/em><\/p>\n Many optometrists have told us they are not sure how to go about their practice transition. Whether it\u2019s buying, buying into, or selling a private practice, you need an experienced \u201cpractice transition support team.” We have found that experienced resources are very hard to find.<\/p>\n Who should be on this team and where can you find them?Belowis a list ofthe most important team members and the services they should perform. Use the list to double-check that you have the practice transition resources you need in place. If you can\u2019t find the resources, call us. We will share ours with you or help you find them.<\/p>\n Consulting<\/strong> Accounting<\/strong> Legal<\/strong> \u2022 Sale contract \u2013 terms, conditions, price \/ payment terms, definition of property conveyed, seller note preparation (if any), employment and non-compete agreements, etc. Practice Valuation \/ Appraiser<\/strong> Financial Institution<\/strong> Many doctors focus on rate as the only criteria for choosing a financial institution. A reasonable rate is a good thing, but it is only one item in a long list of important criteria. A good, optometric-knowledgeable financial institution is a partner you will want and need for your entire career.<\/p>\n Consider the Optometric-Specific Experience of Partners<\/strong> Related ROB Articles<\/strong><\/p>\n Six Strategies to Take Your Practice to the Next Level<\/a><\/p>\n Grow or Die: Complacency is a Practice Killer<\/a><\/p>\n Understand Terms of Leased Instrumentation to Save Money<\/a><\/p>\n Robert Schultz<\/b> is president and CEO of Vision One Credit Union<\/a> in Sacramento, Calif. To reach him: BSchultz@visionone.org<\/a>.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" By Robert Schultz<\/p>\n <\/strong><\/strong>When buying or selling a practice, you need the right people resources in place. Here is a winning-team checklist.<\/p>\n","protected":false},"author":3,"featured_media":947,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1060],"tags":[51],"yoast_head":"\n
\nConsultants can perform many services for buyers and sellers. Consultants must be optometric-specific. There are only a few reputable consultants in the industry and they work on practices across the country. Price ranges vary based on services provided and are considered a very good investment by most ODs. The cost ranges from $1,000+ for situational consulting to $25,000 for hands on management consulting for multiple years. There might be an additional cost for multiple practice locations. At Vision One, we finance management consulting costs into the practice acquisition loan. Consultant services include:
\n\u2022 Matchmaking \u2013 find buyers or sellers
\n\u2022 Weeding out \u201ctire kickers,” saving the seller\u2019s valuable time.
\n\u2022 Conducting buyer due diligence.
\n\u2022 Creating sale contracts \u2013 Though not attorneys, they generally have standard forms that should be reviewed by an attorney for conformance with state law.
\n\u2022 Supplying non-disclosure agreements to protect your practice financial data.
\n\u2022Determining practice sale price or appraisal.
\n\u2022 Helping buyers with transition management issues. Streamlining processes and flow.<\/p>\n
\nLook for a firm with optometric or at least medical practice and sale transaction experience. Most accountants are state-based, but it is not required. Cost ranges vary based on services provided and are considered a very good investment by most ODs. Costs range from $500+ for situational consulting; $2,000 to $5,000 for setting up the books properly; $1,000 to $2,500 for a basic tax return.
\nBenefits to Sellers
\n\u2022 Manage gain on sale tax issues (i.e. seller note deferrals, recapture, capital gains).
\n\u2022 Advise on financial \/ retirement plan (also consider using a financial planner).
\n\u2022 Asset basis determination (tax impact, part of sale negotiations).
\nBenefits to Buyers
\n\u2022 Financial due diligence of the seller’s books.
\n\u2022 Support in the preparation of budgets to determine expected cash flow.
\n\u2022 Asset basis determination (tax impact, part of sale negotiations).
\n\u2022 Setup the proper accounting systems for ongoing operations.
\n\u2022 Create financial reporting to recognize trending, metrics and alerts to significant changes \/ problems.
\n\u2022 Tax management \u2013 shelter ongoing practice earnings.<\/p>\n
\nLook for an attorney with optometric or at least medical and sale transaction experience to help with the following areas. Attorneys must be licensed to practice in the state where the optometric practice is located. Legal fees generally range from $3,000 to $5,000 for full documentation; less for a review of an existing contract. The costs vary from state to state. Often, legal fees are shared between buyer and seller.<\/p>\n
\n\u2022 Attorneys should review contracts from consultants and brokers to ensure conformance to state law.
\n\u2022 Seller representations and warranties.
\n\u2022 Property lease review.
\n\u2022 Incorporation, fictitious names.
\n\u2022 Partnership or shareholder agreements \u2013 terminating partners, buy-out provisions, valuation methods and compensation terms.
\n\u2022 Knowledge of state board requirements – acceptable names, number of locations, ownership structures, etc.
\n\u2022 Overhead sharing \u2013 operating agreements, use of property \/ staff, primary and sub-leases.
\n\u2022 Escrow closing (lien satisfactions, clear title and disbursement of sale proceeds).<\/p>\n
\nAppraisals are useful for impartial third-party opinions of value, only when needed. It has been our experience that an appraiser must have optometric practice experience to provide a realistic value. There are only a few appraisers with these credentials; many are also consultants in the industry. Appraisers generally work on practices across the country. Appraisals range in price from $1,600 to $2,700 and are beneficial in the following areas.
\n\u2022 To resolve value impasses (unrealistic sellers or buyers).
\n\u2022 Valuations for a buy-in or buy-out of partners.
\n\u2022 Valuations to satisfy terminating partner situations (retirement, death, disability, dissolution).
\n\u2022 Occasionally for lending purposes.<\/p>\n
\nAlmost all buyers require financing to pay the practice purchase price plus working capital. Financial institutions with optometric-specific experience are essential. There are only a few institutions, such as ours, that have the experience that are willing to make practice acquisition loans. Many lenders exited the market during the recession, some have recently returned. Expect a good financial institution to:
\n\u2022 Lend to your practice, not just take your deposits.
\n\u2022 Have an intimate understanding of how private optometric practices produce cash flow.
\n\u2022 Provide loan structures that match the borrower\u2019s income needs with the cash flow of the practice.
\n\u2022 Understand and adapt the loan structure to support various practice transition plans.
\n\u2022 Help educate the borrower \/ buyer on practice cash flow.
\n\u2022 Provide a loan term that fits the cash flow requirements. Loans terms that are too short create payments that are too high. Loans terms that are too long mean excessive interest payments and less ability to borrow ongoing to improve the practice.
\n\u2022 Understand third-party payer empanelment and help a buyer setup the practice checking account for electronic settlement.
\n\u2022 Understand the needs of both buyers and sellers in order to make the transaction work.<\/p>\n
\nMembers of your practice transition support team should have substantial experience with optometric practices. You wouldn\u2019t want a patient to see a general medical doctor for eyecare, so don\u2019t expect good results from service providers who only occasionally serve optometry or rely on a general medical model. A knowledgeable support team will understand many of the transition risks and will take the time to explain them to you.<\/p>\n