As a first time practice owner, buying a pre-existing practice is usually the best way to get into a leadership role. However, you must be diligent about selecting a stable practice to purchase in the first place. If you rush out and buy the first available practice, you could end up at the helm of a sinking ship. Here are a few things you need to look for before you move forward on a pre-existing practice.
Practice History - This tends to be surface level information that is readily available. Gather information about how long the practice has been in existence, it's reputation in the community, and competition in the immediate area. In addition, you can look into employee turnover and client base at this point. This will give you a general feel for the practice and help you weed out practices that are in a bad area, or that have a poor reputation with both clients and employees.
Financials - Once you've narrowed down your search, you can work with your broker to gather more detailed information about the practice's financial status. This will include tax information, bank statements, debt obligations and real estate information. Your broker should walk you through this information and help you identify any red flags. You should also consult a tax professional or accountant to get advice.
Professional Information - If the practice passes your financial review you will still have some research to do. Take a look at the professional development of the practice and its compliance with current regulatory standards. Then look at the equipment and resources available to you to determine whether or not that practice has a strong enough foundation for you to expand upon and grow with. What kind of equipment and building materials will you need to invest in to make the practice fit your vision?
As you shop for a practice, you should measure your enthusiasm as you work your way through each stage of the research process. You can begin researching public information and area demographics early on and then bring your broker in to answer questions about financials and professional development as you narrow down your search and get closer to actually closing a deal. The most important thing is to make sure you are buying a pre-existing practice that has what it takes to endure a transitional period and support future growth as you take over the management.