Practice buy in?

[4ophtho]

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Is there a generally accepted formula to calculate a buy in to a practice?
What about "good-will" buy in vs actually buying equity in a practice?
Any experience and advice would be appreciated.

 

[schistosomiasis]

My buddy and I are starting a blog about starting and running a solo ophthalmology practice- the best decision I've ever made. It's at www.solobuildingblogs.com. Feel free to follow and comment! Here's a preview of a future post from our blog about practice valuations. It's from a few talks I went to at AAO about practice valuations:

A quick ballpark is 60-80% of last years collections.

By the way, the consultants charge several thousand for a rough valuation and up to 10-15k for full valuation and negotiation.

Basically, the value of the practice is accounts receivable plus equipment plus goodwill. Let's break down each of the following:

(Continued in this blog post)
Practice valuations


I am curious to hear what those of you that have actually purchased a practice have experienced, so please feel free to share with us.

 

[90 diopter]

There isn't a single accepted valuation formula. I looked into partnership several years back but declined because the price was too high. Still work at the same place as an employee with an adjusted contract so I get a flat percentage of all the revenue I produce.

The older ophthalmologists in my town are having great difficulty unloading their practices. Our practice owner has been trying unsuccessfully for over 10 years. Others in the area in their mid to late 60s are having the same basic problem: they think it's still 1985 and believe their practices are worth 2 million dollars while the potential buyers aren't even wanting to pay a quarter of that price.

If anything, I'd rather start my own practice for a fraction of the cost.

 

[jsridhar]

Amazing post schisto