I recently completed the purchase of chiropractic practice from my father. I thought it would be a relatively seamless process, but there were a few surprises along the way. Some of them could have been avoided had I done some preliminary research, but there wasn't time.
by John DeMatte IV, D.C. in Practice Mode & Requirements on Friday, September 05, 2014
Although it had been discussed, my father and I had not begun planning for the transition.
Looking back, the advantage during the purchase process was that I had worked with my father for several years, which allowed me to understand what made the patients and the office tick. It made the bumps easier to overcome because I knew what I was working toward.
For this reason, I would suggest it is important to work in partnership before buying out original owner.
Other things I learned that would have been helpful before the purchase was initiated:
- While there was no start-up funding needed, I did use some savings through the process.
- Setting up a corporation with a new tax ID number before purchase is important. Without it, transitioning insurance and Medicare is difficult. (A side note: make sure you set aside a significant amount of time to re-establish a relationship with the insurance company. This takes time.)
- Make sure the current practice is incorporated.
- Because I didn’t have two years of tax returns with the practice’s tax id number, I could not secure a business loan.
In the end, none of the surprises were deal-ending, but in a situation where I didn’t know the practice and what I was working toward, it could have been. So, I hope that some of what I learned will make the purchasing process easier for others.
Note: This is the first in a four-part series of Dr. DeMatte's experiences in purchasing his father's practice.