How Long Does It Take to Buy an Internal Medicine Practice?
Buying an internal medicine practice can be a significant process that involves finding the right practice, reviewing financial information, completing due diligence, arranging financing, negotiating the purchase agreement, and preparing for the transition.
The exact timeline can vary depending on the transaction, the buyer, the seller, financing requirements, and how quickly the necessary information is provided.
For physicians considering internal medicine practice financing, understanding the typical acquisition process can help with planning and setting realistic expectations.
Here are seven important steps that can affect how long it takes to buy an internal medicine practice.
1. Finding the Right Internal Medicine Practice
The first step is finding a practice that fits the physician’s professional and financial goals.
Physicians may evaluate factors such as:
- Practice location
- Patient volume
- Revenue
- Profitability
- Purchase price
- Staffing
- Growth opportunities
The time required to find the right practice can vary significantly depending on the market and the physician’s specific requirements.
2. Reviewing the Practice Financials
Once a potential acquisition has been identified, the buyer will generally need to review important financial and operational information.
This may include:
- Tax returns
- Profit and loss statements
- Balance sheets
- Accounts receivable
- Patient volume
- Operating expenses
- Existing obligations
Having complete and organized financial information available can help the process move more efficiently.
3. Conducting Due Diligence
Due diligence allows the physician to evaluate the practice before completing the purchase.
Areas that may be reviewed include:
- Financial performance
- Patient base
- Staffing
- Equipment
- Lease agreements
- Contracts
- Accounts receivable
- Potential liabilities
The complexity of the practice and the availability of information can affect the amount of time required for due diligence.
4. Arranging Practice Acquisition Financing
Physicians who are financing the acquisition will also need to complete the financing process.
The financing process can involve:
- Submitting an application
- Providing financial documents
- Reviewing the practice financials
- Underwriting
- Loan approval
- Final documentation
- Closing
The timeline can vary depending on the financing program, transaction complexity, borrower qualifications, and how quickly requested documentation is provided.
5. Negotiating the Purchase Agreement
The buyer and seller must agree on the terms of the transaction.
The purchase agreement may address:
- Purchase price
- Assets included in the transaction
- Closing date
- Transition arrangements
- Employee considerations
- Other transaction terms
Negotiations can take additional time if the buyer and seller have different expectations regarding the terms of the acquisition.
6. Completing the Closing Process
Before the acquisition closes, the parties may need to complete final legal, financial, and administrative requirements.
This can include:
- Final loan documentation
- Purchase agreements
- Lease assignments
- Insurance
- Licensing requirements
- Business registrations
- Other closing requirements
Completing these steps allows the parties to finalize the transaction and transfer ownership.
7. Preparing for the Transition
The acquisition process does not necessarily end when the purchase agreement is signed.
The physician may also need to prepare for the transition to ownership.
This can involve:
- Employee communication
- Vendor relationships
- Billing and administrative systems
- Technology
- Patient communication
- Marketing
- Working capital
Planning the transition in advance can help reduce disruptions after the acquisition closes.
How Long Does the Entire Process Usually Take?
There is no single timeline that applies to every internal medicine practice acquisition.
A relatively straightforward transaction may move more quickly, while a more complex acquisition involving extensive due diligence, financing, real estate, negotiations, or other issues may take considerably longer.
Physicians should avoid assuming that every acquisition will follow the same timeline.
What Can Delay an Internal Medicine Practice Acquisition?
Several factors can potentially delay an acquisition.
These may include:
- Incomplete financial documents
- Complex practice financials
- Extended negotiations
- Financing issues
- Legal or contractual concerns
- Real estate complications
- Licensing or regulatory requirements
- Unexpected due diligence findings
Being organized and responding quickly to requests for information can help reduce unnecessary delays.
How Can Physicians Speed Up the Acquisition Process?
Physicians can prepare many parts of the process before identifying a specific practice.
This may include:
- Reviewing personal finances
- Checking credit
- Organizing financial documents
- Determining an acquisition budget
- Identifying potential financing options
- Building a team of professional advisors
Having these items prepared can make it easier to move forward once the right acquisition opportunity is found.
Final Thought
The time required to buy an internal medicine practice can vary significantly depending on the buyer, seller, practice, financing, due diligence, negotiations, and other transaction requirements.
The process generally involves finding a practice, reviewing its financials, conducting due diligence, arranging financing, negotiating the purchase agreement, completing closing requirements, and preparing for the transition.
Physicians who begin preparing their financial information and acquisition strategy early may be better positioned to move efficiently when the right internal medicine practice becomes available.
