Blog
Blog
 
 
 
 
 
 
 
 
 
 
 
Blog
IDOC actively shares industry-focused articles, blog posts, podcasts, videos and other thought leadership with our members and other optometric practitioners. Below, you will find links to our growing library of educational materials and multi-media assets written and created by IDOC's team of seasoned industry experts.
Nathan Hayes | 11/16/2017
WHEN SHOULD YOU PLAN YOUR EXIT FROM OPTOMETRY?

A practice owner pulled me aside at our most recent conference in Denver to start thinking of an exit plan.  I always ask two questions when these discussions come up:

“How long do you see yourself continuing to own your practice?”

“How is your retirement savings coming along?”

The OD in questions told me he was about ten years away from wanting to retire.  Which is… a little early to start planning in earnest.

On the other hand, at Vision Expo West this year I was on a panel with Dr. Gary Gerber who asks his cold start-up clients to think about their exit from ownership, so I guess it never is too early to plan.

Here are some key points I think every practice owner should have in mind when considering their exit.

How long does it take to sell?

Once a buyer is in place, it should really only take 6-12 months go arrange financing, go through due diligence, draw up papers and close on a practice sale.  But that is once a buyer is in place.

For most single-owner practices, the search for a buyer will need to start two to three years ahead of the owners intended retirement date.  At the moment, buyers are somewhat scarce on the ground, though that may change over the next several years.  For some owners though, just finding a buyer can take years.

What every owner should do now

Whatever your exit plan, and whenever you plan to exit, you should strive to make your practice as large, as efficient, as profitable, and as well-managed as you can.  Obviously, a practice that checks all these boxes will be worth more, but it will also be a practice you want to own for longer.

Even though practice values are going UP in some cases right now, in my view practices are still more valuable as annuities than as assets to be sold.

The second thing every owner needs to do is maximize the cash flow from their practices and build up wealth outside the practice.  The best situation to be in when you’re ready to retire is to be able to say “whatever I sell for is just a nice addition to my retirement fund”.

This does not mean you shouldn’t make prudent investments back into the practice.  But do make it a priority to take money out and build up your nest egg.

Closing Thoughts

You may have heard the phrase “every entrepreneurial business is built to sell”.  This is true up to a point.  But if you think of entrepreneurship, it’s all about building something no.  No offense to our more innovative practice owners, but a private optometric practice is better described as a professional services company than an entrepreneurial start-up.

Professional services companies tend to have bigger profit margins, but sell for lower multiples of earnings.  This is true of medical practices like optometry, dentistry and dermatology, but also for accounting firms, law firms and consultancies.  This is also why IDOC consultants recommend owners build practices that can provide passive income for the long haul.

Still, it’s never too soon to give some thought to your exit plan; every owner will eventually sell.  If you’re in a more rural area, you may need to offer equity to your associates early to ‘lock them in’ to your practice and obligate them to buy you out, even if you’re not ready to retire.  Practices with a larger pool of buyers may simply choose to maximize income for as long as possible.

Whatever your situation, know that I’m always available to give thoughts on the timing of your exit, a working value for your own retirement planning, or to think through ways to turn your practice into a cash cow that you want to own forever.  

Nathan Hayes
Practice Finance Consultant
Nathan Hayes joined IDOC with a solid background in the eye care industry and serves as IDOC&rsquo;s Practice Finance Consultant. Before Prima launched in 2011, he spent five years in business development for Red Tray and HMI Buying Group. Nathan graduated from Vanderbilt University in three years, with a degree in Spanish and a minor in mathematics. <br/><br/>After graduating, he spent a year working abroad. During that time, he worked for two firms in San Jose, Costa Rica. He interned with Grupo Juridico de San Jose, working in environmental policy to protect a threatened parcel of land, then he worked as a project manager for a US-owned precision machining shop. Nathan then spent 6 months working with street children and orphans in Mexico. <br/><br/>Before getting into the healthcare industry, he was an Assistant Store Manager and completed the Corporate Training Program with Haverty&rsquo;s Furniture Company in Atlanta, GA. Nathan and his wife Heather have a son, Daniel, and a daughter, Hannah. In his spare time, Nathan enjoys reading and outdoors activities - especially cycling and hiking.
 LinkedIn
Trending Blogs
 
 

10/5/2021 | Author: Ximara Vega

How often do you think about your experiences as a consumer? What comes to mind when you reflect on positive interactions? How about negative? I don’t know about you, but for me the negative experiences are much more vivid. Many of those interactions occurred with someone who was well... Read more


9/30/2021 | Author: Amy Alvarez

When I was a retail manager, this would happen to me often. An employee would tell me they didn’t complete an important assigned task, or they would call out for their shift. And I could see it from both sides. They had a lot of conflicting responsibilities that day and yet, this task would... Read more


6/23/2021 | Author: Ximara Vega

School has ended and most of the world has opened back up. Many people I know have multiple weekend getaways, road trips and vacations scheduled because they are making up for lost time. You know what that means? We are surrounded by opportunities to sell sun!!!! The only problem is not... Read more


6/14/2021 | Author: Amy Alvarez

If you are recruiting staff for your practice, you are probably experiencing hiring woes. Some are new - it is a tight job market. Not everyone is able to go back to work depending on their individual circumstances and some employers need more employees than before to meet their current... Read more


5/5/2021 | Author: Nathan Hayes

With the spike in patient demand following the COVID-19 Pandemic, many owners are actively recruiting associate ODs to help carry their increased demand. And any owner looking to hire an associate right now knows that the market is tight.

My feeling is we have an outright shortage of... Read more


3/30/2021 | Author: Geronda Wollack

Managing your staff can be challenging! Am I right? Or am I right? Now, managing your staff and feeling confident with whether you are being compliant poses a different level of challenges. I will share a story to illustrate this challenge.

I had a consult with an Office Manager who... Read more


3/30/2021 | Author: Amy Alvarez

Signed into law on March 11th, 2021, The American Rescue Plan Act offers an extension to Families First Coronavirus Response Act. This provision added additional reasons the leave can be used as well as increasing the cap on eligible compensation for a tax credit.

FFCRA... Read more


3/12/2021 | Author: Ximara Vega

What should a practice do when they have lingering product? Well, 1st we have to identify what lingering product is. In my world, lingering product includes all frames that have been sitting on the shelf for a minimum of 6 months. I like to evaluate product every quarter to identify... Read more


2/22/2021 | Author: Amy Alvarez

Maybe you’ve experienced some unpleasant events in your practice that you didn’t have a policy to cover, or you team is large enough that you vacation policy isn’t working anymore. Maybe you have never liked you scheduling and time management policy but do not know how to go about changing it.... Read more


1/14/2021 | Author: Ximara Vega

Every year people tend to make goals for the upcoming new year. Somehow a new year inspires others to reinvent themselves in some way and like most initiatives, they lose their luster after a few weeks. I was supposed have rock hard abs like 3 years in a row. If ever... Read more

© 2021 IDOC. All Rights Reserved