The Practice Manager's Guide to Buying a Practice - McMasters ...

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The Practice Manager’s Guide to Engaging DoctorsIntroductionThe Practice Managers’ Guide to Buying a Practice has been developed to assist both doctors andpractice managers with the issues involved when considering whether to buy or not to buy apractice. It contains numerous practical tips and advice and identifies the main issues related tobuying the practice. It has been identified as an area where practice managers and doctors alikehave a keen interest, and a lot of important information is contained in the guide.Purchasing a practice could be the best investment in a doctor’s professional life. Given the impactof this investment and the rewards it could bring, it is vital that the purchase of a new practice isdone with the assistance of a legal practitioner. This will ensure all the rights and responsibilities ofthe purchaser are considered.2
The value of a practice, and especially how much goodwill can be applied, is something doctorsconsider frequently. A mark of a good medical practice is a demonstrable ability to produce an aboveaverage return on investment for its owners. Prospective buyers will be prepared to pay a premiumover the value of the practice's tangible assets in order to share in that above average rate of return.This premium is called "goodwill". Goodwill is an intangible asset: it does not have a physicalpresence and will differ in amount and nature from practice to practice.This guide gives information on the basic knowledge of important matters to be aware of whencontemplating purchasing a medical practice. It also considers a variety of aspects that should beexamined upon acquiring the practice, and how to obtain the right advice, providing assistance withthe decision making process. The guide also introduces the concept of goodwill in regards to addingvalue to the practice and discusses essential knowledge required when valuing practices for thepurpose of buying and selling.Topics covered in this module include: Whether to buy or not; Considerations of what is being bought; Staffing issues; Finance; Taking over; An explanation of goodwill; The importance of goodwill; Market value; Improving the profitability and goodwill of a practice;Further reading is encouraged on these topics and will be identified throughout the guide.3
Page 1: The Practice Manager’s Guideto Bu
Page 5 and 6: On the other hand, buying into an e
Page 7: A purchaser will normally be intere
Page 10 and 11: that are not shown in the balance s
Page 12 and 13: If the new doctor is buying into a
Page 14 and 15: yields a maintainable net profit pe
Page 16 and 17: given to sharing the premises with
Page 18 and 19: ooyounger doctors do not see propri
Page 20 and 21: Whatever the motivation behind the
Page 22 and 23: BuyerSellerInformationInformationTh
Page 24 and 25: Step 2: Determine the value of the
Page 26 and 27: It does not consider costs. Some pr
Page 28 and 29: APPENDIX 1CHECKLIST FOR BUYING A PR
Page 30 and 31: Have you read the section in this m
Page 32 and 33: THIS AGREEMENT is made at 17 Brown
Page 34 and 35: Prescribed Occurrence has the same
Page 36 and 37: 3.2 ExclusionAll express and implie
Page 38 and 39: 5.1 Employment of staff(a)(b)(c)(d)
Page 40 and 41: (f)(g)(h)(i)(j)(k)(l)(m)(n)(o)this
Page 42 and 43: 6.4 Purchaser indemnityThe Purchase
Page 44 and 45: Each Party agrees, at its own expen
Page 46 and 47: SCHEDULEPURCHASE PRICEThe written d
Page 48 and 49: Appendix 3 Goodwill as a Component
Page 50 and 51: Appendix 4 Results of recent sales
Page 52 and 53:
Sale 11 2008A married couple, both
Page 54 and 55:
Appendix 5 Capitalisation of future
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