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How To Sell a Practice: 8-Step Guide

Introduction

Selling an optometry practice is one of the biggest financial and emotional decisions of your career. Whether you’re:

  • Transitioning to retirement
  • Bringing on a partner through a buy-in
  • Or accepting a private equity (PE, i.e., an investment group that buys and consolidates practices) offer

…you’re not just “cashing out.” You’re deciding what happens to your patients, your staff, your brand, and your own financial future.

This guide walks you through the full process step by step, from the perspective of ODs On Finance Brokerage (ODoF Brokerage): optometrists who live and breathe the business side of eyecare, and help doctors buy and sell practices every day.

Download 8-Step Guide

We’ll cover in 8 steps:

1. Big Picture: Know Your Goals Before You Sell

2. Practice Valuation Basics (What Your Practice Is Really Worth)

3. Preparing Your Practice for Sale (Clean Up Before You List)

4. Deal Structures 101: OD-to-OD, Partnership Buy-Ins, and PE

5. Financial Modeling: What You Actually Walk Away With

6. The Timeline: From First Thought to Money in the Bank

7. Legal / Tax / Lender Considerations

8. How ODoF Brokerage Fits into the Process

The 8 Step Guide to Selling a Practice

Quick Jump to Steps

(1) Big Picture: Know Your Goals Before You Sell

Before you think about numbers, you need clarity on why you’re selling and what you want life to look like after.

Ask yourself:

  • Timing:
    • Do I want out in 6–12 months? 2–3 years? 5+ years?
  • Workload:
    • Do I want to work part-time after the sale? Full-time for a few years? Or walk away entirely?
  • Control:
    • How important is it to me that the practice stays independent (owned by another OD rather than a corporation or PE group)?
    • Do I care who owns it (single OD vs corporate chain vs PE-backed group)?
  • Financial Needs:
    • How much do I actually need from this sale to hit my retirement or financial goals?
    • Do I want a big lump sum now, or am I okay with being paid over time (seller financing, i.e., the buyer pays me in installments, or earn-outs, i.e., extra payments if the practice hits certain targets)?
  • Legacy:
    • Do I want my brand and name to live on?
    • Is it important that current staff stays employed?
    • Do I want my patients to keep getting the kind of care we provide?

Your answers will guide:

  • (a) Whether we lean toward OD-to-OD sale (one optometrist selling to another), partner buy-in (selling a percentage), or PE (sale to an investment group)
  • (b) How we price and structure the deal
  • (c) How hard we push for certain terms (e.g., post-sale autonomy, non-compete radius, staffing protections)

Key Principle

Remember that the “highest price” is not always the “best deal.” You care about taxes, risk, timeline, and quality of life just as much, and for some, the future of our profession.

(2) Practice Valuation Basics (What Your Practice Is Really Worth)

2.1. The Three Core Numbers in Any Valuation

When ODoF Brokerage values a practice, we focus on three things:

1. Gross Collections (Top Line Revenue)

  • This is your total practice revenue before expenses (all money collected from exams, optical, contact lenses, medical visits, etc.).
  • Usually we look at a 3-year view: e.g., 2022–2024 plus year-to-date annualized (projected out for a full year).

2. Discretionary Net Income (Owner Benefit / SDE)

  • This is the owner’s true economic benefit from the practice. It combines:
    • Owner salary (if you’re on payroll)
    • Practice profit (net income after expenses)
    • Add-backs (personal or non-recurring expenses we “add back” because a buyer would not be expected to continue them—e.g., personal car, personal phone, family on payroll, one-time legal fees, one-time repairs).
  • This is sometimes called Seller’s Discretionary Earnings (SDE).

3. Normalized EBITDA or Cash Flow

  • EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization (a standardized measure of operating profit).
  • Normalized EBITDA means we adjust the numbers to remove one-time or unusual items and set a “normal” owner compensation.
  • This is especially important in PE deals, where PE groups compare many practices using EBITDA.

Think of it like this:

Your practice isn’t priced on what you personally took home last year. It’s priced on what a buyer can reasonably expect to make going forward if they run it efficiently.

2.2. Typical OD-to-OD Valuation Ranges

There is no one “magic formula,” but in OD-to-OD deals, a common range is:

  • ~55% to 75% of trailing 12-month gross collections (i.e., last 12 months of revenue), OR
  • 2.5–4.5X Discretionary Net Income (SDE)

Example:

  • Gross collections: $900,000
  • Discretionary net income: $250,000

Possible value range:

  • Collections multiple: 0.6 × $900,000 = $540,000
  • Income multiple: 3.0 × $250,000 = $750,000

Final valuation might land somewhere between those anchors, based on:

  • Payer mix (e.g., heavy vision plans like VSP vs more medical/fee-for-service)
  • Growth trend (up, flat, or down year-over-year)
  • Location desirability (demographics, competition, development)
  • Staff stability (turnover vs long-term, trained team)
  • Lease / real estate situation (length of term, rent level, assignment rights)
  • Equipment age / tech level (modern lane, OCT, cameras, specialty services)
  • Risk to buyer (practice systems vs highly owner-dependent)

We often blend methods and then apply judgment (experience + market data) to avoid overvaluing or undervaluing.

2.3. Typical Private Equity (PE) Valuation Ranges

PE valuations focus on scale and EBITDA:

  • Smaller, single-location practice: pricing may fall near OD-to-OD ranges or slightly higher, but often with more complex terms (e.g., holdbacks, rollover equity).
  • Larger groups / multi-location:
    • EBITDA multiples (the “x” in something like “6x EBITDA”) can jump: 5–10x+ depending on size, growth, and whether the practice is a “platform” (core acquisition) or “add-on” for the PE group.

But remember:

PE Valuation Ranges

PE deals often involve rollover equity (you keep some ownership in the larger PE-backed entity), holdbacks (part of your price is held in escrow pending certain conditions), and earn-outs (extra payments only if performance targets are hit), not just a simple “cash at close” number.

(3) Preparing Your Practice for Sale

Think of this as preparing a house to list. You don’t need a full remodel, but you do need to clean it up.

3.1. Financial Clean-Up

Buyers (and lenders) will scrutinize your numbers. Help them see the value quickly:

(a) Tax Returns (last 3 years) – Official IRS filings that show your reported revenue and profit.

(b) Profit & Loss (P&L) Statements (annual + recent monthly) – Internal financial reports showing income, expenses, and profit over a period.

(c) Owner Add-Backs Clearly Marked

  • Identify personal or discretionary expenses run through the business (car, phone, meals, travel, family on payroll, CE “junkets,” etc.) so we can adjust SDE upward.

(d) Normalize One-Off Events:

  • Remove or explain one-time events like:
    • Big one-time equipment purchases
    • COVID-era relief (PPP, grants)
    • Unusual legal costs or disaster repairs

The goal:

When a buyer’s bank underwrites the deal (i.e., reviews financials to approve a loan), they should see consistent, explainable cash flow and a clear story.

3.2. Operational Clean-Up

Update key systems where possible:

  • Move toward EHR (Electronic Health Record) if still on paper charts.
  • Track basic KPIs (Key Performance Indicators) such as:
    • Capture rate (percentage of patients buying glasses/CLs in-house)
    • ARPP (Average Revenue Per Patient)
    • New patient count per month
    • Recall/rescheduling efficiency

Staffing:

  • Stable, cross-trained team with clear roles.
  • A staff roster (list of employees, roles, tenure, pay) is helpful for buyers.

Optical / CL:

  • Keep inventory tidy and current (not overloaded with dated lines).
  • Organized displays and back stock.

Policies & Procedures:

  • Document the essentials: how you schedule, check patients in, handle billing/insurance, process refunds, close the day, manage recalls, etc.
  • This becomes your SOPs (Standard Operating Procedures) for the new owner.

3.3. Legal & Lease Clean-Up

Lease agreement:

  • Remaining term (buyers and banks like 5+ years or clear renewal options, e.g., 5-year term with 2×5-year renewals).
  • Assignment clause (a clause in the lease that says whether you can transfer the lease to a buyer and under what conditions).
  • Rent escalations (scheduled rent increases) that are reasonable—for example, 2–3% annually in many markets.

Entity documents:

  • Make sure your practice entity (e.g., S-Corp, C-Corp, PLLC) is clearly documented.
  • Ownership percentages (if multiple owners) are clear.

The cleaner everything looks, the less negotiating leverage the buyer has to discount your price “because of risk.”

(4) Deal Structures 101

Now let’s talk about how practices are actually sold.

We’ll walk through:

  1. Full OD-to-OD Sale
  2. Partnership Buy-In (Partial Sale)
  3. Private Equity Acquisition

4.1. Full OD-to-OD Sale

Who it’s for:

  • Solo owner ready to exit (immediately or over a few years)
  • Buyer is another OD (associate, outside OD buyer, or nearby practice owner)

Common structures:

1. Straight Asset Sale

  • Buyer purchases assets of the practice:
    • Tangible assets (equipment, furniture, computers, inventory)
    • Intangible assets (goodwill, patient charts/records, trade name, phone number, website, etc.)
  • Seller keeps the entity itself (the corporation or LLC) and its past liabilities (e.g., old lawsuits, old tax issues).
  • Very common structure in small healthcare practice transitions.

2. Stock Sale (or Equity Sale)

  • Buyer purchases ownership of the entity (stock/shares in a corporation or membership interest in an LLC).
  • The entity retains all assets and liabilities.
  • More common with larger groups or when contracts, payor IDs, or leases are difficult to re-credential or assign.

Asset Sale vs Stock Sale

Assume:

  • Practice economic value = $900,000
  • Entity is an S-corp or LLC taxed as S-corp (C-corp can be more complex/worse for sellers)
  • For simplicity, assume tax basis in the practice is low (older, fully depreciated assets)
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Feature

What buyer purchases

Liabilities

Credentialing / contracts

Buyer’s tax benefits

Seller’s simplicity

Legal risk over past issues

Asset Sale

Specific practice assets (equipment, inventory, goodwill, charts, etc.)

Typically remain with the seller’s entity

Often need to re-credential payors & rewrite contracts

Can step-up asset basis and depreciate/amortize again

More moving parts (allocation, AR, leases)

Seller retains pre-sale liabilities

Stock Sale (Equity Sale)

Ownership interest in the entity (stock or membership units)

Generally transfer with the entity (unless carved out)

Less change; payor contracts and EIN usually stay the same

Limited; no step-up in asset basis (unless special elections made)

Simpler conceptually: selling shares

Buyer may inherit pre-sale liabilities

Tax Allocation & Net Proceeds (Simplified Example)

Assume total price $900,000.

We’ll compare two stylized extremes:

  • Asset Sale: more weight on goodwill (capital gains) but some on ordinary-income items.
  • Stock Sale: largely capital gains.

⚠️ Real allocations are more nuanced – this is for education only, not tax advice.

a) Asset Sale –

Assume the $900,000 is allocated as:

  • Equipment & FF&E (furniture, fixtures, equipment): $150,000 (ordinary income if fully depreciated)
  • Inventory: $50,000 (ordinary income)
  • Goodwill & intangibles: $700,000 (long-term capital gains, assuming held > 1 year)
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Component

Equipment & FF&E

Inventory

Goodwill/intangibles

Total Tax

Net to Seller

Amount

$150,000

$50,000

$700,000

Typical Tax Character

Ordinary income (recapture)

Ordinary income

Long-term capital gains

Example Tax Rate

37% (example)

37%

20%

Tax Amount

$55,500

$18,500

$140,000

$214,000

$686,000

(You can adjust assumed tax rates down to approximate a 25–30% blended rate.)

b) Stock Sale –

Assume entire $900,000 is treated as long-term capital gains (again, highly dependent on structure):

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Component

Stock proceeds

Total Tax

Net to Seller

Amount

$900,000

Typical Tax Character

Long-term capital gains

Example Tax Rate

20%

Tax Amount

$180,000

$180,000

$720,000

Comparative takeaway (seller angle):

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Metric

Gross Price

Approx. total tax

Net proceeds

Legal risk for old liabilities

Buyer’s depreciation benefit

Asset Sale (Example)

$900,000

$214,000

$686,000

Lower for buyer

Higher (new basis)

Sock Sale (Example)

$900,000

$180,000

$720,000

Higher for buyer

Lower (no step-up)

Summary, in real deals, the buyer and seller often negotiate this balance. A slightly higher stock sale price could make both sides whole if the buyer is giving up tax benefits.

Key elements to negotiate:

  • Purchase Price and Allocation:
    • Total price, and how that price is allocated among:
      • Equipment
      • Inventory
      • Goodwill (the intangible “practice value” tied to brand/patients)
      • Covenant not to compete (separate contract where you agree not to compete locally for a period)
    • Allocation affects taxes for both buyer and seller.
  • Transition Period:
    • Will the seller stay 3–6 months or 1–3 years?
    • Under what schedule (days per week) and pay model (flat salary, per diem, percentage of collections)?
  • Non-Compete & Non-Solicitation:
    • Non-compete = an agreement not to open or work in a competing practice within a certain radius for a certain number of years (subject to state law).
    • Non-solicitation = you agree not to actively recruit staff or solicit patients away.
  • Accounts Receivable (AR):
    • AR = money owed to the practice from insurance/patients for services already rendered.
    • Common options:
      • Seller keeps the AR and continues to collect it after closing while the buyer keeps the new AR.
      • Buyer buys AR at a discount (e.g., 80–90% of face value) and takes over all collections.

4.2. Partnership Buy-Ins (Partial Sale)

Who it’s for

Existing owner wants to:

  • Reduce workload or risk
  • Retain some ownership and future upside
  • Develop a successor or “future buyer”

Basic idea

  • New partner buys a percentage of the practice today at an agreed valuation.
  • Ownership splits accordingly—e.g., original owner 70%, new partner 30%.

Example: 30% Buy-In Modeling

  • Practice valuation: $1,000,000
  • New OD buys 30% at full value

Buy-in price:

30% × $1,000,000 = $300,000

Post-buy-in income distribution (simplified):

Say the practice generates $300,000 discretionary net income going forward:

  • 70% owner: gets $210,000
  • 30% owner: gets $90,000

In practice, you have to decide:

  • Do partners get:
    • Producer pay (e.g., 15–20% of their collected production, like an associate) plus profit distributions?
    • Or just profit distributions only (rare in optometry; most models pay partners for their clinical work plus profits)?
  • Will the buy-in be funded by:
    • A bank loan to the partner (practice stays whole, bank pays seller, partner pays bank)?
    • Seller financing (seller acts as the bank, partner pays back seller over time)?
    • Or a combo of both?

3 Key governance questions:

  • Decision-making:
    • What decisions can a single partner make alone?
    • What requires a majority vote?
    • What requires unanimous consent (e.g., taking on big debt, selling the practice, adding/removing partners)?
  • Future buy-ins / buy-outs:
    • How will future shares be priced (formula, appraisal, multiple of earnings)?
  • Departure / Death / Disability:
    • If a partner leaves, dies, or becomes disabled, how is their stake bought out and at what price?
    • Is there key person insurance (a life or disability policy on partners to fund buy-outs)?

Partnerships can be more complex than full sales, but they can be a powerful tool to:

  • Gradually exit over years
  • Share risk and workload
  • Increase practice value together before a bigger sale (to another OD or PE)

4.3. Private Equity (PE) Acquisitions

Who it’s for:

  • Multi-location or high-revenue practices (often $1M+ EBITDA across groups, but some PE-backed platforms buy smaller “add-on” offices).
  • Owners willing to accept:
    • Less control
    • A formal production contract
    • A more corporate environment in exchange for higher financial upside.

Typical structure:

  • Enterprise value based on adjusted EBITDA (EBITDA adjusted for add-backs and “normalized” owner compensation).
  • Price might be:
    • 5–10x + adjusted EBITDA (e.g., 6× EBITDA = 6 times your adjusted annual EBITDA).
  • Deal proceeds are often split into:
    • Cash at close (money wired to you when the deal closes—often 60–80% of total value).
    • Rollover equity (you reinvest part of your sale into ownership of the larger PE platform).
    • Earn-outs / performance incentives (extra payments if the practice or group hits specific targets over 3–5+ years).

Owners usually sign:

  • Employment agreements (e.g., you agree to work 3–5 years at a set schedule and pay model).
  • Non-compete and non-solicitation agreements (often broader than in OD-to-OD deals).
  • Production-based comp plans (bonuses/comp tied to RVUs, collections, or profit targets).

Pros:

  • Potentially higher headline valuation compared to a single OD buyer.
  • Opportunity for a “second bite at the apple” if your rollover equity grows in value.
  • Operational support: centralized HR, billing, group purchasing discounts, etc.

Cons:

  • Loss of autonomy (scheduling, staffing, products, pricing may be dictated by the group).
  • Culture shift for staff and patients (more corporate feel).
  • Complexity in legal and tax structure.
  • Earn-outs and equity value are not guaranteed—they depend on future performance and market conditions.

PE is not automatically bad or good. Our role (ODoF Brokerage) is often to:

Model OD-to-OD vs PE side-by-side, including taxes, timing, risk, and your personal goals, so you can choose with eyes wide open.

(5) Financial Modeling: What You Actually Walk Away With

Let’s compare high-level math for:

1. Full OD-to-OD sale

2. Partnership buy-in

3. PE acquisition

(Numbers are simplified for illustration and do not replace personalized tax advice.)

5.1. Full OD-to-OD Sale Example

  • Gross collections: $1,000,000
  • Discretionary net income (SDE): $300,000

Assume a 3× SDE multiple:

  • Practice price = 3 × $300,000 = $900,000

Assume this is an Asset Sale with a typical allocation favoring goodwill (which is usually taxed at long-term capital gains rates for the seller, generally lower than ordinary income).

Buyer takes a practice loan; seller gets:

  • Cash at close: $900,000

Assume an average effective tax rate of ~25% on the overall sale (blend of capital gains + some ordinary income; actual rate depends on your situation):

  • Estimated taxes: 0.25 × $900,000 = $225,000
  • Rough net after tax: $675,000

You may also have:

  • Post-sale employment income if you stay on as an associate (separate from the sale proceeds).

5.2. Partner Buy-In – Example

Same practice:

  • Valuation: $1,000,000
  • Partner buys 30%: $300,000

Proceeds today: $300,000

If tax-effective rate is ~25%:

  • Rough taxes: $75,000
  • Net proceeds: ~$225,000

But you still own 70% of the practice.

If the practice continues to generate $300,000 SDE:

  • Before partner: you received the full $300,000
  • After partner (simplified equal workload):
    • You get 70% × $300,000 = $210,000
    • Partner gets 30% × $300,000 = $90,000

You’ve:

  • Monetized 30% of your practice value now
  • Reduced your share of future profit
  • Gained a partner who shares clinical and business responsibilities
  • Kept the option to sell the remaining 70% later (potentially at a higher valuation if you grow together)

5.3. PE Acquisition – Simplified Example

Same practice:

  • Adjusted EBITDA: $300,000

PE offer: 6× EBITDA

  • Enterprise value = 6 × $300,000 = $1,800,000

Deal structure:

  • 70% cash at close = $1,260,000
  • 30% rollover equity = $540,000 (equity in the new PE platform, not cash yet)

Cash at close: $1,260,000

Assuming 25% effective tax:

  • Taxes: 0.25 × $1,260,000 = $315,000
  • Net cash now: $945,000

Rollover equity: $540,000

  • Could appreciate significantly if the platform sells again at a higher multiple.
  • Could stagnate or decline (if growth slows or market changes).
  • Typically illiquid until a later transaction.

You likely also have:

  • A 3–5 year employment agreement paying you a clinical salary + potential production bonus.

So PE can look like:

  • Higher upfront net cash than OD-to-OD
  • Plus potential upside in equity
  • At the cost of:
    • Less control, more corporate oversight
    • More complex risk profile

OD-to-OD sale vs Partner buy-in vs PE Comparison

(Assume same base practice for all three)

Base assumptions (same practice across all scenarios):

  • Gross collections: $1,000,000
  • Discretionary Net Income (SDE): $300,000
  • Adjusted EBITDA: $250,000 (slightly lower than SDE after normalization)
  • Effective tax rate on sale proceeds: 25% (blended capital gains + ordinary, just for modeling)

Sale Structure Overview

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Feature

Who buys?

Ownership sold now

Control after deal

Typical valuation basis

Deal complexity

Cultural change

OD-to-OD Full Sale

Another OD (associate or external)

100%

Seller usually exits control

SDE and collections multiples

Moderate

Moderate

Partner Buy-In (30%)

Associate / partner OD

30%

Shared control, original owner still majority

Same valuation, applied to partial percentage

High (governance/agreements)

Low–moderate

PE Acquisition (6× EBITDA)

PE-backed group

Often 60–100% of practice entity

PE group controls major decisions

Adjusted EBITDA multiple

High (legal, tax, equity, earn-outs)

High

Economics Scenario

  • OD-to-OD: 3× SDE → 3 × $300,000 = $900,000
  • Partner buy-in: 30% of $1,000,000 valuation → $300,000
  • PE: 6× EBITDA → 6 × $250,000 = $1,500,000 total “enterprise value”
  • 70% cash at close, 30% rollover equity

(a) Proceeds at Closing

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Metric

Gross sale value

Cash at close

Rollover equity

Estimated tax (25% of cash portion)

Net cash after tax (today)

Future upside potential

OD-to-OD Full Sale

$900,000

$900,000

$0

$225,000

$675,000

Limited (unless investing)

Partner Buy-In (30%)

$300,000

$300,000

$0

$75,000

$225,000

Yes (remaining 70% stake)

PE Acquisition (6×, 70% cash / 30% equity)

$1,500,000 (total)

$1,050,000 (70% of 1.5M)

$450,000 (30% of 1.5M, paper value at close)

$262,500

$787.500

Yes (rollover equity + potential earn-outs)

b) Income After the Deal (Yearly, Simplified)

Assume:

  • Practice continues to generate $300,000 SDE pre-deal.
  • After the deal, all scenarios still produce something similar operationally.
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Metric

Ownership share after deal

Typical post-sale role

Post-sale annual clinical income (estimate)

Additional owner profit (distributions)

Lifestyle control

OD-to-OD (Seller stays 1–2 yrs PT)

0%

Part-time associate or exit

$80–$150k (if part-time)

$0

High if retired, moderate if PT

Partner Buy-In (Seller remains 70% owner)

70%

Owner-doctor & managing partner

Producer pay (e.g., $150–$200k)

70% of practice profit

Moderate–high (shared decisions)

PE Acquisition (Seller works 4 days/wk)

Usually 0% of local entity (but has platform equity)

Employed OD under contract

Salary + bonus (e.g., $200–$250k)

Depends on equity performance (no guarantees)

Lower (corporate policies, production metrics)

(6) The Timeline: From First Thought to Closing

A realistic timeline with ODoF Brokerage looks like this:

Step 1: Initial Strategy & Valuation (1–4 weeks)
  • Meet with ODoF Brokerage to discuss your goals, timeline, and preferred exit path.
  • Collect core documents:
    • 3 years tax returns
    • 3 years P&Ls
    • Year-to-date financials
    • AR report
    • Payroll summary
    • Equipment list
    • Lease(s)
  • We run a snapshot valuation (quick, high-level) and, if continuing, a full valuation (deeper, more detailed).
Step 2: Prep & Packaging (2–6 weeks)
  • Clean up financials and reconcile any inconsistencies.
  • Build your practice narrative:
    • History and story
    • Services offered (medical, specialty, dry eye, myopia, etc.)
    • Payer mix and key metrics (new patients, capture rate, etc.)
    • Staff and culture
  • Create a confidential practice profile / CIM (Confidential Information Memorandum) – a professional, anonymized document that buyers see after signing an NDA.
  • Clarify your transition plan (how long you’ll stay, what role you’ll play).
Step 3: Quiet Marketing & Buyer Screening (1–6+ months)
  • ODoF Brokerage markets the practice confidentially to:
    • Our 32,000+ OD community
    • Internal list of active buyers
    • Select potential strategic buyers (sometimes including PE groups)
  • All interested parties sign an NDA (Non-Disclosure Agreement) before seeing detailed data.
  • We screen for:
    • Financial capability (do they qualify for lending?)
    • Cultural and clinical fit
    • Timeline and seriousness
Step 4: Offers, LOIs, and Negotiation (1–2 months)
  • Buyers submit offers and LOIs (Letters of Intent):
    • An LOI is a non-binding summary of the price and key terms the buyer is offering, used as a roadmap for the final contract.
  • We help you:
    • Compare offers apples-to-apples (cash vs seller financing vs earn-outs, asset vs stock, etc.).
    • Negotiate on:
      • Price
      • Term structure
      • Transition employment
      • Non-compete scope
      • AR/inventory handling
  • You select a buyer and sign the LOI, after which you typically grant them exclusive due diligence for a period of time.
Step 5: Due Diligence & Contracting (1–3 months)
  • Buyer’s CPA, lender, and advisors will:
    • Verify financials and add-backs
    • Examine AR aging (how old the outstanding balances are)
    • Review lease terms and any subleases
    • Confirm payroll and staff details
  • Attorneys’ draft:
    • APA (Asset Purchase Agreement) or SPA (Stock Purchase Agreement)
    • Employment agreements
    • Non-compete and non-solicitation
    • Real estate documents (if building is owned)
  • You and the buyer go through rounds of review and revisions.
Step 6: Financing & Approvals (1-2+ months, overlaps with Step 5)
  • Buyer secures:
    • SBA loan (Small Business Administration–backed loan)
    • Or conventional practice loan (non-SBA)
  • Lender may require:
    • Third-party valuations
    • Landlord consents
    • Insurance policies (life insurance on buyer, disability, etc.)
  • If PE, there may be:
    • Internal investment committee approvals
    • Board approvals
Step 7: Seller Closing & Transition Checklist (Closing week plus 3-12+ months)

Below is the definitive, consolidated checklist of everything a practice seller must do before, during, and after closing. Use this as your final reference to ensure a smooth, clean, and fully compliant transition.

10-Point Closing Checklist

A1. Review & Approve All Closing Documents

  • Asset/Stock Purchase Agreement (APA / SPA)
  • Bill of Sale
  • Assignment agreements (lease, contracts, phone numbers, etc.)
  • Settlement statement / closing memo
  • Non-compete / non-solicitation agreements
  • Employment agreement (if staying on)
  • Verify all terms match the signed LOI
  • Confirm AR, inventory, and prorations match the agreement

A2. Confirm Attorney & CPA Review

  • Attorney reviews all legal clauses, indemnifications, liabilities
  • CPA reviews tax impacts & purchase price allocation
  • Make sure both advisors approve documents before signing

A3. Ensure Release of Personal Guarantees

  • Lease guarantees
  • Equipment leases
  • Vendor contracts
  • Software service guarantees
  • Any bank or LOC guarantees

A4. Tail Malpractice Coverage

  • Purchase tail coverage if retiring or leaving practice
  • Confirm start/end dates align with closing
SECTION B — FINANCIAL RECONCILIATION

B1. Complete Final Inventory Count

  • Frames & optical stock
  • CL stock
  • Supplies and tools
  • Separate items you’re keeping personally

B2. Reconcile Accounts Receivable & Payables

  • Determine who keeps AR (seller or buyer)
  • Ensure AR and AP aging reports are accurate
  • Settle any seller-side payables owed before closing

B3. Confirm Payoffs

  • Payoff letters for practice debt, leases, LOCs
  • Ensure payoff dates coordinate with closing date

B4. Wire Instructions & Banking

  • Provide verified wire instructions to escrow
  • Confirm seller proceeds routing
  • Close or repurpose practice bank accounts per CPA guidance

B5. Estimated Tax Planning

  • Coordinate with CPA on projected tax liability
  • Prepare any required quarterly estimated payments
SECTION C — STAFF, PAYROLL & HR TRANSITION

C1. Conduct Joint Staff Announcement

  • Meet with buyer prior to closing
  • Deliver clear, unified communication
  • Reassure job continuity & introduce new leadership

C2. Final Payroll Coordination

  • Confirm last payroll under seller entity
  • Clarify PTO payout vs transfer
  • Handle bonuses, commissions, and retro pay

C3. Employee Files

  • Transfer permitted HR files to buyer
  • Retain legally required documents in seller archive

C4. Staff Transition Planning

  • Provide staff with contacts for new HR issues
  • Clarify operational changes (EHR login, phone system, etc.)
SECTION D — PATIENT COMMUNICATION & RECORD HANDLING

D1. Patient Notification

  • Approve patient letter/email
  • Schedule website banner or announcement
  • Prepare social media/Google Business Profile update

D2. HIPAA-Compliant Records Handoff

  • Determine who the record custodian is
  • Provide instructions for record requests
  • Document retention periods

D3. Referral Partners

  • Connect/introduce buyer to key community referral partners
SECTION E — TECHNOLOGY, SYSTEMS & DIGITAL ASSETS

E1. Transfer All Digital Credentials

  • EHR admin logins
  • Imaging software
  • Phone/VOIP admin accounts
  • Practice email systems
  • Wi-Fi and network credentials
  • Remove personal login accounts

E2. Website & Domain Transfer

  • Transfer domain registrar ownership (Roya, Google Domains, etc.)
  • Transfer hosting and DNS access
  • Update contact info

E3. Online Presence

  • Transfer:
    • Google Business Profile
    • Yelp
    • Facebook / Instagram
    • Online scheduling portals
  • Remove seller personal contact info

E4. Phone Number Porting

  • Transfer VOIP account ownership
  • Confirm SMS/texting numbers transfer

E5. Cloud Storage Transfer

  • Move Google Drive/Dropbox/OneDrive files
  • Ensure HIPAA compliance during migration
  • Archive old files as needed
SECTION F — VENDOR, SERVICE & UTILITIES TRANSITION

F1. Vendor Notifications

  • Labs
  • Frame reps
  • Contact lens suppliers
  • VSP/Eyemed/insurance credentialing contacts
  • Billing/RCM services
  • Janitorial, trash, laundry

F2. Software & Subscription Transfers

  • EHR
  • Merchant services
  • Websites & SEO
  • Online forms
  • Marketing subscriptions
  • Cancel any seller-owned subscriptions

F3. Utilities

  • Electric
  • Water
  • Internet
  • Trash
  • Security systems
  • Change or cancel autopays
SECTION G — REAL ESTATE (IF APPLICABLE)

G1. Lease Assignment

  • Ensure landlord has approved assignment
  • Confirm new lease or assumption terms match expectations
  • Remove seller personal guarantees

G2. Rent Proration

  • Confirm accurate proration at closing

G3. Building Ownership (if seller owns real estate)

  • New lease signed with buyer
  • Update insurance policies
  • Update tenant information
  • Reconcile CAM charges and property tax prorations
SECTION H — BILLING, INSURANCE & COMPLIANCE

H1. Insurance Panel Actions

  • Terminate seller NPI reassignment if retiring
  • Reassign seller NPI to new entity if staying on
  • Update CAQH profile
  • Notify Medicare/Medicaid if applicable

H2. Outstanding Insurance Audits & Recoupments

  • Clarify responsibility for pre-closing periods
  • Ensure agreements specify audit liability

H3. Medical Records Compliance

  • Ensure regulatory compliance with HIPAA & state laws
  • Document record access process

H4. Business Licenses & Controlled Substances

  • Update or terminate DEA registrations
  • Update local business licenses
SECTION I — PERSONAL, FINANCIAL & EMOTIONAL TRANSITION

I1. Financial Plan Update

  • Update investment plan
  • Update retirement projections
  • Revisit insurance (life, disability, health)

I2. Personal Identity & Schedule Shift

  • Plan your post-exit lifestyle
  • Prepare for emotional adjustment to stepping back from ownership

I3. Celebrate the Milestone

  • Selling a practice is a huge accomplishment. Mark the moment.
SECTION J — POST-CLOSING FOLLOW-UP (FIRST 30–90 DAYS)

J1. Stay Available per Transition Agreement

  • Attend scheduled handover meetings
  • Answer buyer questions
  • Provide continuity for staff/patients

J2. Validate Final AR Collections (if seller keeps AR)

  • Ensure your billing team has access
  • Confirm payments are routing correctly

J3. Audit Recurring Subscriptions

  • Ensure no surprise charges remain tied to seller card

J4. Final Entity Wind-Down

  • As advised by CPA
  • Dissolve entity or keep open for tax-year close
  • Retain required documents

(7) Legal, Tax, and Lender Considerations

7.1. Legal

You’ll typically assemble a team:

Broker (ODoF Brokerage):

  • Drives valuation, marketing, buyer selection, deal structure strategy, and process management.

Attorney (healthcare/transactional):

  • Reviews and negotiates LOI and final agreements.
  • Ensures compliance with healthcare laws (e.g., Stark Law and Anti-Kickback Statute, which regulate financial relationships in healthcare) and state corporate practice rules.

CPA (Certified Public Accountant):

  • Models tax impact.
  • Advises on entity structure and allocation of purchase price.

Common legal documents:

  • LOI (Letter of Intent)
  • Asset or stock purchase agreement
  • Bill of sale
  • Assignments (e.g., lease assignment, contract assignment)
  • Employment agreements
  • Non-compete / non-solicitation agreements
  • If partnership: operating agreement or shareholder agreement

7.2. Tax

Key tax issues:

Asset vs Stock sale:

  • Asset sales often favor the buyer tax-wise but can still be fine for sellers with good allocation.
  • Stock sales may be better for sellers (e.g., capital gains treatment) but less attractive to buyers.

Purchase price allocation:

  • Dividing price among:
    • Tangible assets (equipment, inventory)
    • Intangible assets (goodwill, patient records)
    • Covenants (non-compete)
  • Impacts depreciation and amortization for buyer and capital gains vs ordinary income for seller.

Installment sale / seller financing:

  • Seller receives payment over time and may spread tax liability, but also carries risk if buyer defaults.

Your CPA should be consulted before signing an LOI because seemingly small wording changes can have big tax impacts.

7.3. Lender

From a lender’s perspective, the key is:

  • Debt Service Coverage Ratio (DSCR) – a measure of whether practice cash flow is enough to cover loan payments plus provide a reasonable income to the buyer.
  • Clean, consistent SDE is essential:
    • If valuation is too aggressive, DSCR fails and the bank won’t approve the loan.
  • Lenders may also:
      • Place conditions on seller staying for a transition period.
      • Limit how much AR or inventory can be rolled into the purchase.

This is why a realistic, defendable valuation is crucial. Overpricing often kills deals long before closing.

(8) How ODoF Brokerage Fits into the Process

ODs On Finance Brokerage is built by optometrists who understand both patient care and spreadsheet math.

When you work with us to sell a practice, our role typically includes:

1. Valuation & Strategy

  • Run a snapshot valuation for quick orientation and, if you’re serious, a full valuation based on your actual numbers.
  • Explain OD-to-OD vs partner buy-in vs PE, with explicit modeling of:
    • Sale proceeds
    • Taxes
    • Timing
    • Risk and lifestyle implications

2. Practice Packaging

  • Turn your financials and story into a polished practice profile / CIM, anonymized but detailed enough to attract serious buyers.
  • Highlight your practice strengths and opportunities (e.g., underutilized exam capacity, room to add specialty services) without misrepresenting reality.

3. Marketing to Our OD Network

  • Confidentially promote your practice to our 32,000+ OD community and curated buyer list.
  • Pre-screen inquiries so you’re not wasting time on tire-kickers or unqualified buyers.

4. Negotiation & Deal Structure Support

  • Help you interpret offers and LOIs: asset vs stock, cash vs seller note, earn-out, etc.
  • Work alongside your attorney and CPA to shape a deal aligned with your priorities (maximum cash, smoother transition, staff protection, etc.).

5. Deal Management to Closing

  • Keep momentum by coordinating:
    • Buyer, seller, lender, landlord, and legal teams.
  • Identify and troubleshoot common deal blockers early (lease assignment problems, unrealistic valuation, lender issues).

6. Education & Transparency

  • We’re not here to push you into PE or any particular buyer type.
  • Our mission is to make selling your practice:
    • Understandable (no mystery jargon)
    • Data-driven (real numbers, realistic multiples)
    • Aligned with your goals (financial, clinical, and personal)

Summary

Selling an optometry practice isn’t just “finding a buyer.” It’s:

  • Understanding what your practice is truly worth
  • Choosing the right type of sale (OD-to-OD, partner buy-in, or PE)
  • Modeling what you actually walk away with after taxes, structure, and time
  • Protecting your staff, patients, and legacy
  • And designing a transition that fits the next chapter of your life
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