Program Outline. Practice Transition Presentation by Lisa Cribben: Transition Planning for an Optometry Practice

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1 Program Outline Practice Transition Presentation by Lisa Cribben: Transition Planning for an Optometry Practice When to Start planning What steps are part of a transition Questions to ask and answer to develop transition planning goals When is the right time to buy a practice When is the right time to Consider your exit strategy and planning to maximize value What is the right method of exiting you practice (Sale to group, bring on associate, etc.) Value of an Optometry Practice Current market dynamics and impact on value of Optometry Practice Estimate a value for your practice Methods to consider How deal structure can impact the value and the cash you receive What is the right method to market your practice How long will it take to sell my practice? Sale/Purchase of a Practice Steps in the process of selling or buying a Practice Find a buyer/seller Negotiate a price Due diligence of buyer and seller Develop a purchase agreement Sign documents, money changes hands, and parties celebrate! Individuals that you should you consult through the process (accountants, attorneys, etc.) When to talk to your employees and patients about the transition

2 Legal Presentation by Thomas N. Shorter: Legal Considerations when Transitioning an Optometry Practice Identify the critical legal components when transitioning a practice Identify and discuss the models of ownership transition, such as full sale, partial sale and partnership agreement Discuss the benefits and steps to prepare for a due diligence process Discuss the importance of restrictive covenants and components of non-compete and non-solicitation clauses Discuss the necessity of written agreements Key components and the necessity of a confidentiality agreement. Up-to-date regulatory issues affecting optometry practices Tax Implications of a Purchase/Sale of a practice Different tax consequences of stock versus asset sale Different corporate structures and tax impact on sale Different approaches to structure a transaction to minimize tax impact

3 Practice Finance by Steven Hipson: Life After Residency What should I look for in a loan? Financing 101 What are lenders looking for when considering financing your practice? Credit Collateral Character What is the most important factor in the financing of your practice in assuring your success? Cash flow Understanding Your Credit Report All 3 bureaus operate independently and do not share information Consumers are entitled to all 3 CBR s once a year: Creditors report how you pay your obligations to the credit bureau monthly Your Credit Bureau File Includes: Trade Lines/Accounts Public Record and Derogatory Information Inquiries Your Credit Bureau File Excludes Bank Accounts, Brokerage Accounts & Other Assets Income Utilities Things to Remember: Credit Bureau s only look at how you pay your obligations Derogatory information stays on your credit report for a minimum of 7 YEARS Bankruptcies stay on for 10 YEARS Unpaid Tax Liens can stay on INDEFINITELY How is your score calculated? Payment History Amounts Owed Credit History New Credit Types of Credit

4 Build Your Team CPA Attorney Financial Advisor (Insurance) Financing Source Mentor/Advisor Practice Broker Contractor Equipment Vendor Options After Graduating Associating Positives Opportunity to practice procedures and increase hand speed Earn good income without the involvement and risk of owning your own practice Associating Negatives Working long hours building an asset for someone other than yourself No control of staff, patient or case selection Restrictive covenant New Office Start-Up Positives Build a practice the way you want to build it in the space you select New equipment and furniture that fits your personal style Hire and train your own staff using your business and service philosophies New Office Start-Up Negatives You have to deal with the growing pains of starting a business from scratch (staffing, billing, benefits, pay plans, scheduling, etc.) You will have to continue associating until the practice can support itself In the beginning, your income will be lower than when you were an associate

5 Practice Acquisition Positives Established patient base Staff understands job descriptions and have already been trained Immediate cash flow which enables you to pay yourself immediately Practice Acquisition Negatives You are buying someone else s practice (philosophy, treatment planning, staff training, systems, etc.) Possible loss of patients and staff Need for additional capital investments to replace older equipment, make technology or cosmetic upgrades Bank Proposals What To Look For In Practice Finance Loan Proposals: Loan Amount: The amount of money you are approved for Terms Available: 5, 7, 10, 12, 15 or 20 years Interest Rate: Fixed or variable Fees, Fees, Fees: Advance payments, administration fees, closing costs, points, etc. Pre-Payment Flexibility: Penalties for paying off early Collateral Requirements: Practice vs. additional collateral Rate and Approval: Ability to lock and for how long Loan Servicing: Direct lender vs. Loan broker Post Financing: Programs to assist you after you open Future Growth: Restriction vs. Fostering of future growth