Buying a medical practice is not as simple as one might think. There are many factors to consider and there is no such thing as a “one-size-fits-all” model for buying a medical practice.
In this blog post, we will discuss what you need to know about buying a medical practice so that you can make the right decision for your future!
- Understand Your Goals
- Conduct Market Analysis
- Make Sure You Understand The Terms of Sale
- Get The Proper Financing In Place
- Research Practices for Sale Near You
- Understand the Financial Aspects of Buying a Medical Practice
- Set Your Timeline for Purchasing a Practice
- Take Your Time
- Contact a Medical Practice Broker
Understand Your Goals
This step might seem obvious, but make sure that your goals align with the practice under consideration before proceeding. For example, do not go into this without understanding how much money you will need to invest in the purchase or what type of work environment will best suit your needs.
If possible, set up an initial interview with someone who has purchased a practice before so that they can provide valuable insight into their experiences.
Conduct Market Analysis
You will want to speak with a valuation expert so you can understand what multiples buyers are typically paying for similar practices in your market area. This is key information because it will show whether or not an individual practice is overpriced and therefore may be more difficult to obtain financing.
Make Sure You Understand The Terms of Sale
Since every practice is sold differently, make sure that you understand all of the terms before signing anything! This includes understanding what assets are excluded from the sale, what contracts you will be assigned, and any restrictive covenants you will receive from the Seller. You don’t want any surprises down the road that could impact your business negatively.
Get The Proper Financing In Place
This cannot be overstated – make sure you have the proper financing in place before you sign any documents. You will want to seek out an experienced healthcare banker who regularly funds medical practice acquisition loans. Having a loan commitment in hand when you submit your offer will go a long way in the eyes of the Seller. Additionally, the bank will also serve as a safety net, as they will not lend on an overpriced practice that cannot service the practice loan debt.
Research Practices for Sale Near You
There are many practices for sale at any given time, so it is important to do your research ahead of time. You can use our website to find a list of medical practices that are currently for sale in your area. It is also important to make sure you have an idea about the fair market value of similar businesses in your area so that you don’t overpay.
Understand the Financial Aspects of Buying a Medical Practice
It is important to understand what type of financial commitment you are willing and able to make, as well as your timeline for purchasing a practice. Remember that the yearly rent or mortgage payment may not be all that you will need to pay upfront in order to buy a practice, so be sure to calculate other expenses that may or may not come up during the process.
Set Your Timeline for Purchasing a Practice
Purchasing the right medical practice can take time, so you will need to find one that fits your schedule. If possible, set up an initial interview with someone who has purchased a practice before so that they can provide valuable insight into their experiences. You may also want to make a list of specific questions to ask the seller in order to get a better understanding of the business.
Take Your Time
Be sure to take your time when making this decision. Buying a medical practice is a big investment and it should not be taken lightly. Make sure to speak with as many people as possible who have gone through the process so that you can get all of the information you need before moving forward.
Contact a Medical Practice Broker
We know we just put a lot of information out there for you, but don’t worry! If you need help finding and vetting medical practices for sale, Strategic Medical Brokers is here to help. We have years of experience working with buyers and sellers and can provide valuable insight during the process. Unlike most business brokers who charge a commission, we work with our buyer clients on a consultative basis, which can save you tens of thousands in fees at closing.