Glance through the listings of practices for sale these days and the majority of the solo practices being sold are currently owned by men. That’s not surprising, says Scott Daniels, a practice broker with Practice Concepts in Newport Beach, California. “Historically this had been a male-dominated profession,” he says. Even as women comprise the majority of graduates, it will take years for practice ownership parity to even out.
Although ODs today face a more regulated and complex practice environment than they did decades ago, ownership still makes sense. “If you look at Small Business Administration and various research, most entrepreneurs purchase or start a business to have more control and independence. Making more money isn’t the number one reason,” Daniels says.
While the recession slowed practice transfers, it also laid the groundwork for entrepreneurial drive. “Some optometrists were being
laid off by their employers at the height of the recession. Others were working harder and not getting raises. Being an employee was no longer viewed as secure and stable,” Daniels explains. In recent years, he says that the majority of the practice sales he has handled were between retiring male ODs and women ODs, either working on their own or in partnership with their husbands. The husbands were either ODs as well, opticians, practice managers or even stay-at-home dads. This combination provides a couple
with the desired balance of work and personal life and affords a good flexible work schedule, good income and ability to vacation or take time off together, he says.
Cheryl Engels, OD, MBA, a senior consultant with the Power Practice and director of its Practice Made Perfect program designed for first-time buyers, says she’s seeing more women buying practices outright from retiring male ODs rather than going into partnership with them. The age and gender differences might be a factor in making a swifter transition of ownership rather than working through shared decision-making if there are differences in personality or leadership style. “I see even more opening cold. It could be that those opening cold feel they need more help and that is why they seek me out,” she says.
Robert Schultz, president and CEO of Vision One Credit Union, which offers banking services to independent ODs, says that about 50 percent of the company’s practice-purchase financing is for women. Many of the transactions he’s involved with are larger. “Optometric practices work well with multiple-OD owners and can allow full-time or part-time work in a practice. We finance multiple ODs in ownership to help in the formation of larger practices, which are more able to compete against corporate optometry and achieve better cash flow through economies of scale. Many are a mix of male and female ODs,” he says.
In Daniels’ experience, most practice transfers are still occurring between one solo owner and another. “I see activity with investors on the larger grossing offices,” he says. But the finances of many practices today aren’t high enough to support more than one doctor or an investor. “With the average practice grossing $600,00–$700,000 per year, half of the practices simply can’t afford to pay for more than one doctor’s full-time salary. These are great for a solo doctor looking to make a good income.”
Most buyers rely on financing 100 percent of the purchase price, and loans are readily available for buyers based on the profit of the practice. However, It can be challenging to obtain financing for practices that are either significantly larger or smaller than that average. The very large practices grossing over $2 million may be attractive to doctor alliances or venture capitalists but more difficult for first-time buyers. And the very small practices (under $300,000) have little to no profit, which makes it harder for buyers and lenders. Buyers often need an immediate income unless they have a spouse or second job.
These smaller-grossing practices are great values for buyers willing to take the time to grow and who can afford to earn less in the first few years. Buyers can often get these at great values, and the purchase price might be financed by the seller. Once the buyers become profitable, they can refinance with a lender and pay off the seller within a few years. Daniels knows that first-hand. His wife, Alissa Wald, OD, bought her practice 26 years ago when her parents lent her $40,000. The first couple of years she worked part time outside the office. Each year, the practice grew, and today it is generating almost $1.4 million in revenue.
Click on the doctors’ photos below to read their stories.