Issues that Impact You
Money matters in the buy/sell process; your personal image.
Richard Kattouf, O.D.
I'm considering purchasing an optometric practice and want to know if the seller is acting in an acceptable manner. He wants me to pay him $5,000 (a refundable fee) prior to giving me any data on his practice. Is this the way the buy-sell process is normally handled? The selling doctor seems secretive about his financial data.
--- Dr. T.R. Archon, via e-mail
T. R., you've just unveiled a relatively common request from a seller. It's a totally unnecessary transaction in an inquiry between a potential buyer and seller. No money need change hands. What's common is a confidentiality agreement. The seller must assure that his desire to sell the practice is kept private. In many communities, if the public or other doctors are aware of the potential sale, it could hurt the value of the practice in the following manner:
- If the public is aware of the sale, they may be more amenable to changing doctors because they view the new doctor as a change of care. This can cause significant patient erosion. The ideal situation is for the public to find out through a professional, formal announcement. This way, they're more likely to remain after the transition.
- If other doctors in the community are aware of the potential sale through the grapevine, they may open near your location to increase competition. Note: Never let reps from equipment companies or other suppliers know about the sale of your practice -- they have no confidentiality agreement with you and could reveal your information to
What would you do?
What would you do in this type of situation? Here's what happened to one optometrist:
Dr. Fox contacted me and explained that he'd been working commercially for 5 years and was ready to join the independent ranks. He found a seller who convinced him to pay $5,000 prior to receiving any profit and loss statements, tax returns and hard asset values. This was just a verbal gentleman's agreement.
The seller told Dr. Fox that he'd return the $5,000 to him if they didn't finalize an agreement within 90 days. Dr. Fox called me after he'd paid. The seller wanted $85,000 more than the fair market value for his practice. After only 65 days, Dr. Fox rejected the offer at my urging and demanded that his $5,000 deposit be returned. The seller dragged his feet, but Dr. Fox filed a lawsuit to recover the fee. Six months and $1,500 in legal fees later, he was awarded the $5,000.
Handle with care
Time, stress, loss of money and tension aren't worth foregoing proper representation prior to your engaging in these types of ventures.
Because hand-shake agreements are no longer acceptable in our society, professional written agreements are necessary for a good end result.
Be wary of sellers who are secretive about financial data. No one can purchase a practice without full disclosure. If they appear to be hiding something, they probably are. Often they have a separate set of books that they never report, or they verbally exaggerate their numbers.
Proceed with caution when initiating a buyer/seller relationship. Don't give away your money for nothing -- make sure you know what you're getting into and what you'll get out of a transaction. Just as people buying a house go through a realtor, when you approach a venture that's new to you, consider seeking professional help.
The issue of a doctor's appearance when seeing patients has recently been brought to my attention. What's your view?
--- Dr. S. Lee, via e-mail
Dear Dr. Lee, think of the saying, "Your body is a billboard."
Your appearance is a non-verbal message to your patients. The most important thing about it is your attention to detail, especially in the following key areas:
- keep hair neat and well-groomed
- eliminate body odor
- avoid excessive use of perfume or cologne
- keep nails neat and manicured
- keep breath fresh and clean
- make sure your teeth are clean and white
- maintain erect and confident posture.
As healthcare professionals, we should set an example. Attention to detail with personal appearance is the best image to project.
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 him to address an issue you have with your practice, call (800) 745-EYES or e-mail
Optometric Management, Issue: May 2001