Buying an optometry practice is a big step in the career of any optometrist. According to the American Optometric Association’s website, it’s often taken by newly minted doctors fresh out of school. Regardless of whether you’re a new graduate or an associate optometrist ready to take the next step, this isn’t a decision to be taken lightly. Buying an optometry practice should be done with careful consideration and thorough research. Use our guide to make sure you’re investing in the right opportunity, whether that’s an independent practice or a franchise like Pearle Vision.
The Basic Purchasing Process
The process of buying an optometry practice is, at its core, fairly straightforward. The basics are:
- Engage with the seller. Express your interest and begin discussing the practice’s operations, financial information, business culture, and so forth, as well as the local market and patients the practice serves.
- Research. Gather information about the practice, such as its records, reputation, and operational procedures. This helps you get a feel for how the practice operates from an outside perspective and helps evaluate it for potential growth and profit.
- Craft an offer. Once you’ve finished an evaluation and determined if the practice suits your needs, make an offer to the seller that reflects the practice’s value. Negotiations will likely ensue.
- Perform due diligence. Engage with professionals to make sure the information you’ve been presented is, in fact, accurate. Explore whether discrepancies between what you discover and what the seller presents may be simply oversight, over-estimation, or under-estimation on the seller’s part.
- Pre-closing preparation. Once you’ve performed all the due diligence and hammered out a price you and the seller agree on, finalize the necessary financial arrangements, including transferring licenses and preparing to take over operations.
- Post-closing process. After the deal is made and you’re the new owner of the practice, make sure to notify patients, transfer vendor accounts, and start working with the staff to integrate new management practices.
The key to the whole purchasing process is to make sure you’re making an informed decision with each step. You should avoid guesswork and assumptions as much as possible. The process of buying a franchise like Pearle Vision is similar, except that you don’t typically negotiate a purchase price. The franchisor has a set price for which you’ll receive the right to open a franchise under the brand name and various services and assistance, such as training, administrative support, and site selection.
Best Practices for Buyers
To make sure you get the right optometry practice that meets your needs and will fit with your professional and personal goals, there are some good rules that successful owners have followed. First, make sure to carefully consider what it is you want out of a practice. If you’re looking for a high patient volume with access to a lot of insurance carriers, then a location close to urban areas may be best, while if you want a practice that allows for a more even work-life balance, a rural setting may work better for you.
When you meet with the seller, don’t be afraid to ask about their reasons for selling, and evaluate their behavior. Make sure to watch for red flags that indicate there may be problems with the practice or that the seller isn’t serious, such as not having a clear reason for putting the practice up for sale, being combative, or constantly changing conditions during negotiations, and being uncertain about where they’re going after selling. Don’t be afraid to sign a non-disclosure agreement or confidential information memorandum to learn more about the practice; this is normal before a seller presents sensitive information like price estimates or financial records.
When evaluating a practice’s worth, be sure to factor in goodwill; this specifically refers to the profit potential that a practice has. Practice sales company Transitions Elite defines goodwill as “the value a company receives due to its reputation and customer loyalty.” Other important, intangible assets to consider include long-standing patients, an accessible and working website, and profit margins. Speaking of intangibles, reputation is important; check patient reviews and professional reviews online to get an outside perspective on the practice and what patients think of it.
Some aspects of an optometry practice can only be evaluated by seeing them for yourself. You want to not only meet the seller in person, but also visit the practice and tour it during working hours. That allows you to observe it in operation, look over the equipment, and see how convenient the site is for patients to find.
Finally, when you’re ready to make an offer, consult a team of trusted advisors. This might include an attorney, a certified public accountant, a lender, and a business advisor or mentor. This team will help you go over any offers and determine, based on the information gathered previously, if the offer is reasonable.
Handling a Fixer-Upper
fter evaluating an optometry practice, you may observe enough positive aspects that you’d be willing to make an offer while planning improvements and changes to address its flaws. After all, no business is perfect, and not every fault is insurmountable. Some ways to improve the profitability of a practice include:
- Improve customer service. While offering good eye care is the heart of a practice, having staff that know how to handle customers and sell eyewear is crucial to making the most of your revenue streams.
- Evaluate your vision plan acceptance policies. You want to aim for a sweet spot where you accept enough policies to give you a broad patient pool but filter out policies that will undervalue your services and products.
- Ensure your practice’s location is convenient. Having a visible location convenient to walk-in traffic can lead to new, long-term patients and eyewear customers.
An Alternative to Searching for a New Practice
Finding an optical business for sale can be a long, difficult process. As you can see from the steps above, it requires a lot of information gathering, verification, and analysis. You’ll also need to bring in help to thoroughly evaluate everything you find. If you want to open an optometry practice but want to avoid the difficulties that opening an independent business comes with, there is an alternative.
Opening an optometry franchise gives you a large degree of autonomy in how you operate while providing you with the expert assistance you need in locating, equipping, and staffing a practice. A franchisor will provide you the necessary training, a proven business model, an operations manual, and various administrative services. Finally, a franchisor helps you make important business connections, from suppliers to potential business partners. If you’re looking to start a practice but want to make sure you have clear guidelines and a playbook for running the business side of things, then a franchise like Pearle Vision is an option worth considering.
Get a 20/20 View of Success with Pearle Vision
We’re always looking for skilled, ambitious optometrists who want to open their own practice. We’re ready and willing to help you on your path to business success, whether that means opening a brand new franchise with us or switching over an existing practice to a conversion franchise.
Submit a form to get started and learn more about your franchising opportunity with Pearle Vision.
