Step-by-step Guide

Sale of your Optometry Practice

You should plan the partial or total sale of your clinic several years in advance so that you can increase your chances of selling at the desired time and price. Start thinking about what type of exit strategy you would like to adopt: a total sale of your clinic or a partnership with an optometrist? In both cases, selling your clinic means sharing or delegating decision-making power in your business.

The following sequence of steps to buy an optometry practice is provided by way of illustration only. Some of these steps must be completed concurrently.

1

PREPARE YOUR CLINIC FOR SALE

You have spent time and energy building your optometry clinic, it is only natural that you want to reap the benefits of your efforts. Contrary to what you might think, clinics that want to sell in 5 or 10 years need to put in place strategies that will facilitate the sale of their practice, such as improving their web presence, investing in new equipment or installing clinic management software. Clinics that continue to invest in their practice will have an easier time finding a buyer and selling at the desired price.

2

CHOOSE YOUR EXPERTS AND IDENTIFY YOUR RESOURCES

Before selling your clinic, it is important to identify the right people and resources that will assist you in your clinic's transition plan. You first have to choose an accountant and lawyer, ideally with experience in evaluating and selling or buying optometry practices.

Professional associations and buying groups, such as OSI Group, can also provide you with information and resources that will be quite helpful in planning your transition strategy.

3

EVALUATE YOUR CLINIC

There are various forms of clinic evaluation, most of which are usually performed by accountants. A professional with experience in evaluating optometric clinics will do a better job.

To accurately evaluate the clinic, you will need to review at least the last three years of financial statements. Apart from the financial evaluation, several aspects can also have an impact on the value of a clinic. However, these factors cannot be calculated using a formula (such as the age of your clientele and your neighbourhood, for instance).

4

SEARCH FOR A POTENTIAL BUYER

Start by consulting your circle of friends and contacts to see if they know of an optometrist who would be interested in joining or buying an optometry practice. The most successful strategy is to sell to an optometrist who is already practicing at the clinic.

If there are no potential candidates, consider checking whether an optometrist with entrepreneurial interests would be willing to join your practice. Very early on in the process, start delegating some management tasks to this optometrist to assess their potential.

If you are looking to sell in a few years, but have a potential candidate practicing with you, consider moving up your partnership plan or presenting the candidate with a conditional letter of intent to sell that will demonstrate your seriousness.

If you do not have any candidates in mind, it is always possible to post your offer of sale or partnership in a confidential manner using the posting service offered by OSI Group.

5

EXCLUSIVITY AND CONFIDENTIALITY AGREEMENT

Once you have a prospective buyer for your clinic, it is best to enter into an exclusivity and confidentiality agreement with them.

This agreement ensures that the parties will respect the confidentiality of the information exchanged.

It also guarantees the exclusivity of negotiations for a specific period of time in order to eliminate the need to undertake research and incur costs while the other party negotiates with a third party.

It also establishes the conditions to be met by both parties in order to reach a purchase offer.

Following this agreement, you can share your financial statements with your potential buyer so that they can evaluate your clinic. Take a look at Vision Entrepreneur Exclusivity and Confidentiality Agreement Template.

6

PRESENT YOUR OFFER

Once your potential buyer has assessed the value of your clinic with their accountant, they will present you with an offer to purchase. The offer to purchase contains the essential elements of the sale (price, percentage, date, and payment terms, to name a few) as well as an outline of the transaction.

This is when negotiations with the optometrist can begin. Some may find it useful to include their accountant, lawyer, and tax specialist at this stage.

Note that this part of the process can often result in substantial professional fees. Acceptance of the offer to purchase is legally binding for both parties, subject to what may be discovered during the due diligence process.

7

DUE DILIGENCE

Once you and the buyer have agreed on a selling price, the latter will conduct a due diligence review of your clinic. This means you must be prepared to share more information about your business.

The buyer will likely perform a thorough check of financial statements, tax returns, debts, supplier relationships, employee relationships and more.

These elements could further affect the final sale price of your clinic. Again, your lawyer and accountant will guide you through the details of this important step.

8

FINALIZE THE SALE

This step involves presenting and signing the deed or contract of sale in accordance with the offer to purchase and based on what the due diligence has revealed. The buyer, your lawyer or your accountant may have a model deed that they wish to use. It is up to you and the prospective buyer to agree on the best solution for all parties.

9

DRAFT A SHAREHOLDER AGREEMENT
(if more than one owner)

The shareholders’ agreement is a document that sets out the actions to be taken by the shareholders in specific situations. For instance, it could include clauses dealing with the acquisition of the clinic by a third party or the distribution of dividends among the shareholders.

This document should be drafted by a lawyer. However, if possible, it is best to come to a mutual agreement, outline the terms and work with a lawyer once the shareholders have agreed on the details of the agreement.