Due Diligence for Eyecare Practice: Best Practices for Purchasing a Clinic
Buying an optometry practice is one of the most significant investments you’ll make in your professional life. It can be a transformative move—an opportunity to gain independence, build equity, and shape a clinic around your own vision of patient care. But it’s also complex. Beneath the surface of patient files and exam rooms lie financial, legal, and operational dynamics that can either position you for long-term success—or leave you managing surprises.
That’s where due diligence for eyecare practice acquisition comes in. Done right, it protects you from hidden risks, reveals the clinic’s true value, and equips you to negotiate with confidence. It’s not just a checklist—it’s a mindset. Below, we outline key areas to evaluate before signing on the dotted line, along with practical insights to help you assess whether the practice you’re considering is truly the right fit.
Eyecare Business Due Diligence: Financial Fundamentals Beyond the Top Line
The most common mistake buyers make is focusing on revenue alone. A clinic’s gross income tells you how busy it looks—but not how healthy it is. You need to understand profitability, cash flow, and the quality of earnings over time.
Start by requesting three years of optometry practice financial statements, including profit and loss statements, balance sheets, and cash flow reports. Look for consistent earnings and keep an eye out for red flags like declining revenue, rising operating costs, or excessive owner compensation. In a strong practice, net income typically represents at least 20% to 25% of gross revenue. Falling below that may point to bloated overhead, underpricing, or operational friction that could erode returns after the purchase.
Cash flow is a more telling metric than revenue. Evaluate how much cashflow the clinic generates and don’t neglect to take into consideration necessary investments, such as equipment or leasehold improvements, which could limit the future cashflow that can be generated.
A diversified revenue stream is essential. As a benchmark, eyeglasses in a primary eyecare practice should represent about 50% of total income (or 35-40% if the clinic has specialty services such as contact lenses, dry eye, or vision therapy). If it’s significantly lower, the retail side of the business might not be pulling its weight—or worse, it’s been neglected.
When reviewing financials, don’t stop at a single year. Trends over a three-year period are far more revealing—especially when growth falls short of the industry average of 3-4% annually. Healthy clinics often outpace this.
Also review liabilities and inventory. High payables or aging stock can cut into cash flow and may require immediate investment. If there is debt on the balance sheet, that will also affect the value of the business and needs to be considered in overall valuation.
Patient Retention in Eyecare: Who Are They—and Can You Grow With Them?
Your eyecare clinic will serve a community, and understanding this community is critical. Who are the patients? Where is the growth potential?
Start with demographics. A clinic heavily skewed toward older adults may offer near-term stability—but without younger families coming in, long-term growth could stall. Practices in higher-income areas also tend to see stronger revenue per patient.
New patient volume is a key health indicator. Most stable practices see 20–25% of their caseload made up of first-time patients. Anything under 15% may indicate stagnation or low visibility—while numbers over 30% could point to poor retention or increased local competition.
Online reviews, community reputation, and referral activity are also telling. What are patients saying publicly? Is the clinic known and trusted locally? Does the clinic have a competitive advantage? These intangibles can significantly impact long-term eyecare practice growth.
Location matters, too. Accessibility, parking, signage, and surrounding development all play a role in patient acquisition and retention. Check out our step-by-step guide for the full picture.
Systems and Staff: What Are You Inheriting?
A practice’s people and processes are just as important as its numbers. The smoother the operation, the easier your transition—and the better your odds of retaining patients and staff.
Start with systems. Is the clinic still relying on paper files, or is it using a modern EMR? Digital systems improve efficiency, reduce admin burden, and enhance patient care.
Staff stability is another major indicator. High turnover—typically anything above 30%—raises red flags. It may point to internal dissatisfaction, weak management, or cultural misalignment. On the flip side, a turnover rate closer to 15–20% is considered healthy for most optometry clinics.
Also ask whether the team has succession potential. Are there staff members who can step into key roles if needed? Clinics with internal growth pathways tend to navigate transitions more smoothly—and retain talent longer.
Ask for employee contracts to review their conditions.
Legal, Lease, and Compliance: The Fine Print That Can Bite
Assuming you are acquiring the shares of the clinic, you’re not just buying charts and chairs—you’re taking on the clinic’s legal footprint. That includes everything from lease agreements to regulatory compliance.
Your legal homework should cover licensing, billing practices, and patient data handling. A crucial part of eyecare business due diligence is making sure the clinic complies with all provincial regulations and hasn’t been the subject of past insurance audits or disciplinary actions.
Optometry lease agreements often hide long-term challenges in plain sight. Go beyond term and rent—review use clauses, subletting rights, CAM fees, and what’s required for insurance and liability coverage. If your lease doesn’t align with your business plan or restricts flexibility, it can quickly become a financial constraint.
And if the business’s legal background raises red flags, you can always acquire the assets only, such as equipment, furniture, and client lists. Doing so ensures you do not assume legal liability from past ownership.
If you’re unsure, get legal support from someone with experience in healthcare contracts.
Equipment and Infrastructure: The Hidden Price of Modernization
Outdated equipment might not show up in a valuation, but it will show up in your budget.
During your walkthrough, assess the age and condition of all major equipment: pre-testing units, diagnostic tools, exam chairs, lab machinery. Ask for maintenance logs and replacement timelines.
Replacing this equipment is costly—and if the space needs renovation, factor in downtime, permits, and patient disruption. What looks like a good deal on paper may carry hidden renovation costs that undercut value.
Fixed assets that are highly amortized can be a sign of underinvestment.
Legal Exposure and Hidden Liabilities
Before you finalize a deal, ask about any ongoing lawsuits, unresolved staff disputes, or compliance investigations.
Also review contracts with suppliers, group purchasing agreements, and equipment leases. Automatic renewals or restrictive clauses can limit your options down the road.
Transition Strategy: What Happens After the Ink Dries?
Even if the deal terms are solid, the real test comes during the transition. A smooth handoff protects revenue and trust among both patients and staff.
Will the current owner stay on for a handover period? How will patients be informed? What’s the retention plan?
The earlier you start shaping your transition strategy, the easier it is to manage expectations and maintain stability—ensuring successful eyecare practice acquisition.
Get a Second Opinion: Why Optometry Practice Valuation Matters
An effective optometry practice valuation should go beyond validating price and paint a clear picture of what drives value. An experienced appraiser can assess the true worth of intangible assets like patient loyalty, staff tenure, and operational efficiency. This insight strengthens your negotiation position and helps you secure appropriate financing.
Simply put, a well-supported clinic valuation is one of the best practices for purchasing a clinic.
You Don’t Have to Navigate This Alone
Due diligence for your eyecare practice isn’t just about protecting yourself from risk. It’s about stepping into ownership with your eyes wide open—knowing what you're getting into, what you can build on, and what you’ll need to fix.
At Vision Entrepreneur, our coaching team helps optometrists clarify their values and vision for clinic ownership. We guide candidates toward opportunities aligned with their aspirations—including connecting them with optometrists looking to sell.
When the time comes for your eyecare practice acquisition, we ensure you’re well prepared to engage the right external experts. And once the transaction is complete, those who join OSI Group are supported by a dedicated Practice Advisor who helps implement key performance metrics and operational efficiency, setting the stage for long-term success.
Ready to take the next step? Speak with a coach!
