In 2019, 16.2% of optometrists were self-employed. As the owner of an optometry practice, the question of whether or not to sell your practice is one of the most difficult decisions you’re likely to face. If you decide to sell, you’ll need to carefully consider when and how to go about the sale process. Having a clear exit strategy will make this difficult transition period much smoother and easier on you, your finances, your employees and your customers.
What are Valuation Formulas?
One of the first things to look at when thinking about selling your optometry practice is the current value of your practice and whether your business is growing or decreasing – because if and when you do sell, you want to make sure you receive the maximum value possible. Practice valuation formulas and resources available online can help you come up with the estimated value of your practice, though seeking the professional advice of a consultant will ensure a much more accurate valuation.
To begin, you can estimate the minimum value of your practice by adding up all your assets and subtracting your liabilities to come up with your equity. You’ll know your practice is growing if your equity is increasing every year.
What to Consider Before Selling an Optometry Practice
Of course, there are many factors to consider beyond just the value of your practice. First you need to assess your personal goals. Do you want to continue working for the new owner of your practice or are you looking to retire completely? If you own the building, do you want to sell that as well? How much do you need to make from the sale in order to achieve your goals?
Second, consider the timing and timeline of the sale and how much preparation is needed. It’s recommended to start your exit strategy as early as possible, even up to five years in advance, to make sure you make the most of the sale and handle the transition for your employees and customers with utmost care. You will also want to think about whether now is the best time for you to sell. You may want to consider that employment of optometrists is projected to grow 18 percent from 2016 to 2026, much faster than the average for all occupations.
Steps to Take in Selling Your Optometry Practice
If you come to the conclusion that now is the right time for you to sell your optometry practice, here are a few tips to make the process easier and more successful:
- Maintain an up-to-date, itemized asset list.
- Properly label expenses for add-backs (discretionary expenses not fundamental to the continued operations of the practice) for the last three years.
- Pay for a professional practice appraisal about two months before you plan to put your practice on the market. This can make buyers more confident, as they tend to be skeptical about the valuations not conducted by a professional.
- Make capital investments to increase, or at the very least maintain, the value of your practice leading up to the sale, such as purchasing up-to-date equipment, making necessary repairs, and updating the office to make it look as good as possible.
- Consider hiring a practice broker to help you with the sale process.
PECAA Resources for Selling an Optometry Practice
If you’re thinking of selling your practice and not yet a member of PECAA, consider joining to help ease the burden. PECAA offers members consulting to assist with the valuation and sale of their practice, as well as plenty of resources to guide you in each step of the sale process. Contact us today to get the ball rolling!