How much to save up for potential practice buy-in?

[90 diopter]

I'm looking at potentially buying into a portion of a practice in the next year or two. Based on independent research and what I've been told, I will eventually need to hire a practice valuator to determine the worth of the practice, an attorney to assist with the transaction, and an accountant to look over the books to make sure the finances are legit.

Can anyone out there who has done this recently advise me on how much cash I should expect to spend on all these services? I've never worked with a lawyer or accountant before and have no clue what these people charge.

Any other advice pertaining to this subject will also be greatly appreciated

---

Members don't see this ad.

 

[orbitsurgMD]

I'm looking at potentially buying into a portion of a practice in the next year or two. Based on independent research and what I've been told, I will eventually need to hire a practice valuator to determine the worth of the practice, an attorney to assist with the transaction, and an accountant to look over the books to make sure the finances are legit.

Can anyone out there who has done this recently advise me on how much cash I should expect to spend on all these services? I've never worked with a lawyer or accountant before and have no clue what these people charge.

Any other advice pertaining to this subject will also be greatly appreciated

Are you working in the practice at the moment? To prepare your valuator, you could request the seller prepare a detailed inventory of the practice assets (and liabilities), including all real property, if there is any. You also should have beforehand annual profit/loss statements for at least the past three years, and five years, if available.

How are you planning a purchase? Will this be a purchase of shares? If so, are all shares identical?

 

[90 diopter]

I'm a salaried employee at the moment. I have a list of all the things I need for a proper valuation.

Another employee doc and I will both be buying in for equal shares of the practice split 3 ways with the current owner. Right now, there is only one owner; after the buy-in there will be 3.

My question is not necessarily regarding details of the buy-in, but what I should be expecting as far as lawyer and accountant fees. I just want to make sure I have enough saved up in cash to pay these advisors. Just need a ballpark- should $15,000 be enough?

 

[orbitsurgMD]

I'm a salaried employee at the moment. I have a list of all the things I need for a proper valuation.

Another employee doc and I will both be buying in for equal shares of the practice split 3 ways with the current owner. Right now, there is only one owner; after the buy-in there will be 3.

My question is not necessarily regarding details of the buy-in, but what I should be expecting as far as lawyer and accountant fees. I just want to make sure I have enough saved up in cash to pay these advisors. Just need a ballpark- should $15,000 be enough?

You can contact the valuator, if you have one and get an estimate. it may even be worth fixing a "not to exceed" cap on charges. Ditto for the lawyer.

I have not bought into a practice. I founded one four years ago. The lawyer charged me about $1200 or so for corporation documents, seals, IRS tax numbers. I could have probably done that even cheaper, but I went with an attorney a colleague recommended and it was trouble-free. My accountant charges about $125 per hour, but most of her work is done by her staff whose hourly rates are lower.

Simple share purchases should require almost no legal or accounting time. The valuation fee could be more easily negotiated if the tedious work of inventory and collecting the statements is done off the clock by the seller. If there is a new partnership agreement being drafted (presumably by the seller, no?) then a document review, time for a client discussion, maybe a call or two to the valuator to clarify some details on the transaction, all-in, less than ten hours each for the accountant and the lawyer. Do the math. I would think $15K would be enough.

 

[90 diopter]

Great- thanks for the helpful info!