Article Date: 2/1/2001

FIX THIS PRACTICE
Buying and Selling Basics

Save yourself the time, money and hassle -- get a professional's advice.
By Richard S. Kattouf, O.D.

Q I'm an optometrist attempting to purchase a practice. The seller and I don't know how to proceed. Can you help us?

---- Dr. C.K. Lake

A. Dr. Lake's question is one of the most common reasons for doctors to seek consulting services.

First, let me give you a perspective on the market for buying and selling practices.

Due to these facts, we're in a buyers' market. This doesn't mean that practices aren't selling. Rather, both parties require professional consultants to perform a fair market appraisal, negotiate the terms and develop a buy-sell agreement. The cardinal rule is: Don't attempt these tasks on your own.

Why it's best to get help

In my 20 years of experience in practice appraising, brokering and buy-sell agreements, I've witnessed a full scope of problems when professional help wasn't requested. Below are some examples.

With professional help, the consultant would've been the impartial, third-party negotiator, alleviating the adversarial posturing between the buyer and seller.

The buy-sell process

The buy-sell process is comprised of three steps.

  1. getting an appraisal
  2. the negotiation between the buyer and seller
  3. the actual buy-sell agreement.

Have the hard-asset value, accounts receivable and goodwill evaluated. Goodwill has the most flexibility in the calculations. Don't make the mistake of having an accountant or attorney perform the appraisal. They've seldom performed an appraisal of an ophthalmic practice.

Points to consider

Consider the location of the practice, its age, the seller's willingness to stay on as a private contractor, the retention of staff, accepted insurance plans, collection policies and specialties practiced. Other intangible factors, such as the age of the buyer, also come into play.

Frequently, a buyer under age 30 will inherit a staff of 40- and 50-year-olds. Will the staff want to "mother" the buyer? Will they respect him?

Another issue is staff control. Does the existing staff have specific boundaries? How well trained are they and what are the levels of delegation?

Do what makes sense

Eye exams must be performed by vision care specialists. Practice appraisals, negotiations and buy-sell agreements must also be handled by consultants who have a track record in this confusing yet critical area.

This may be the biggest business move of your life. Seek professional assistance to save yourself time, money and a potential hassle.

Dr. Kattouf is in private practice in Warren, Ohio, and he's president and founder of two management and consulting companies. If you'd like Dr. Kattouf to address an issue you have with your practice, call (800) 745-EYES or e-mail advancedeyecare@hotmail.com.



Optometric Management, Issue: February 2001