Selling an Optometry Practice to Private Equity
Selling an optometry practice is one of the largest financial decisions an OD will make, and the buyer you choose can shape your income, your role and your legacy for years afterward. Private equity groups have been active buyers of optometry practices, but private OD buyers, often financed by lenders, remain an important alternative.
In recent years, many private equity groups have become more selective about which practices they pursue and how they structure offers. That has led more sellers to compare offers carefully rather than assume a private equity sale is the only path to a strong outcome. This article explains the main differences. Every deal is different, and nothing here is legal, tax or investment advice; sellers should work with healthcare counsel, an accountant and an experienced advisor.
How Private Equity Groups Buy Optometry Practices
Private equity groups typically acquire practices to build larger platforms of eye care locations, often with centralized billing, purchasing, marketing and administration. Their offers are usually based on the practice’s adjusted earnings, sometimes described as EBITDA, rather than on gross revenue. Our article on optometry practice EBITDA explains how those earnings are calculated and adjusted.
A private equity offer may include several components:
- Cash at closing: the portion paid when the deal closes
- Rollover equity: an ownership stake in the larger platform, whose future value is uncertain
- Earnouts or deferred payments: amounts tied to future performance or time
- Employment agreement: a commitment for the selling OD to keep practicing for a period after closing
State laws on who may own or control an optometry practice vary, and some structures use management services arrangements. Healthcare counsel should review how any proposed structure fits your state’s rules.
Selling an Optometry Practice to a Private OD Buyer
A private sale usually means selling to an associate, a partner or an outside optometrist who wants to own a practice. These buyers often finance the purchase with SBA-backed or conventional loans, which means the price must be supported by the practice’s cash flow and a lender’s review.
Private sales can offer:
- A simpler structure, often with more of the price paid at closing
- Continuity of the practice’s name, culture and independence
- A more flexible exit timeline, depending on the buyer
- A successor who may already know your patients and staff
The trade-off is that a private buyer’s price is typically limited by what a lender will finance and what the practice can repay. If a seller note is part of the deal, it is typically subordinate to the senior loan, and lenders or programs may limit earnouts and how seller notes are paid.
Comparing Offers Beyond the Headline Number
Two offers with similar headline values can produce very different outcomes. When comparing, sellers should consider:
- How much is paid in cash at closing versus deferred, contingent or paid in equity
- The terms and length of any post-sale employment, including compensation and restrictive covenants
- How much clinical and operational control you will keep
- What happens to staff, the practice name and patient care standards
- Tax treatment of each component, which should be reviewed by an accountant
- The risk that rollover equity or earnouts are worth less than expected
Your Role After the Sale
Many sellers underestimate how much their daily life may change. With a private equity buyer, the selling OD often becomes an employee of the new organization, working under its policies, schedules and purchasing decisions. Some doctors welcome the relief from administration, while others find the loss of autonomy difficult. With a private buyer, the seller may stay for a shorter transition period and then step away entirely, or continue part time by agreement.
Which Practices Attract Private Equity Interest?
Private equity groups generally look for practices with scale, multiple providers, strong documented earnings, a healthy optical and medical revenue mix and systems that do not depend on a single doctor. Smaller, owner-dependent practices may receive less interest or less favorable terms.
Many practices, including many solo practices, may be a better fit for a private OD buyer. Understanding where your practice stands can help you choose the right path. Our guide to optometry practice valuation outlines what drives value for different buyer types.
Preparing Before Selling an Optometry Practice
Whatever path you choose, preparation can improve both the price and the process:
- Clean up financial statements and document add-backs
- Reduce owner dependence by developing associate doctors and staff leaders
- Clear aged optical inventory and update aging equipment where it makes sense
- Review the lease, including renewal options and assignment rights
- Organize payer and vision plan contracts, while recognizing they should not be assumed to transfer
Our article on how to increase optometry practice value before selling covers these steps, and our optometry practice transition plan guide explains how to time the sale with retirement goals.
The Role of Lender Financing in Private Sales
Because private buyers usually rely on financing, the seller’s records matter. Lenders review the practice’s tax returns, financial statements, revenue mix and the buyer’s profile. Clean, well-documented financials can make it easier for a qualified buyer to obtain financing, which may widen the pool of interested buyers. Every loan is subject to approval, and eligibility and terms depend on the buyer, the practice and lender review.
Final Thoughts
Selling an optometry practice to private equity can make sense for some owners, while others may reach their goals more directly with a private OD buyer. Comparing cash at closing, ongoing obligations, control and risk, rather than the headline price alone, can help you choose the path that fits your plans.
US Medical Funding supports owners planning a sale through our advisory and consulting services, and helps qualified OD buyers finance practice purchases through our optometry practice acquisition financing.
