Buying my practice

What are your professional goals? What are your preferences in terms of a practice? Do you want to practice alone or with partners? Do you want to practice in the city, in the suburbs, or in a rural area? Affiliated to a chain or a banner? These questions call for careful consideration. This exercise is crucial, as the answers will determine how you will proceed.

Professional realities
As the sole proprietor, or a future partner or affiliate, you will have to:

• Find a partner or a replacement in case of sick leave, maternity or paternity leave, or other absence
• Hire administrative staff, as the case may be
• Assess your insurance needs

Your personal life
Your professional choices will have an impact on your family life and your personal goals: having children, buying a home, etc. So it’s essential to consider these aspects.

You have found the perfect location and adequate offices. Depending on your type of practice, you can obtain:

• a clientele (active customer files)
• furniture and equipment
• a building and other assets
• or the seller’s shares

Your investment
Practising your profession could involve major investments. The cost will depend on a number of factors:

• The business volume (number of active client files)
• The market share
• The operating costs
• The size of the establishment (building or other assets)

Affiliation and association
Will you be affiliated or associated with a banner or a chain? The services offered vary accordingly and limitative clauses may apply at the time of resale, depending on whether or not you are the owner of the lease. It is therefore very important that you examine the contract in detail.

Examine the purchase offer
Should you buy the seller’s shares or the assets of the practice? Do the terms of sale suit you? Does the appraisal reflect the actual value of the practice? If you are incorporated, who should buy? The tax consequences vary according to the type of transaction and your status (incorporated or not). A thorough analysis is a must. A financial advisor can help you make sense of it all and assess financing options.

What is your current financial situation? Obtaining credit to buy your practice requires personal financial statements showing your income, your expenses, your savings and your debts. Over and above numbers, many other factors must also be taken into consideration.

Make your plans
A balance sheet and cash flow statement are helpful tools for professionals which can be used to:

• Assess your borrowing capacity
• Establish a repayment plan that may extend over several years as the case may be
• Determine if leasing is the best option, if this option is available to you
• Establish the operating budget plan for your practice (projections)
• Identify the best tax structure (incorporation, your professional income, etc.)
• Plan your personal budget and savings
• Determine the work pace required to meet your obligations

Offer accepted!
You have in hand all of the seller’s documents, did all the due diligence, obtained your financing, and your offer (or counter-offer) was accepted. If all the conditions are satisfied, you can go ahead with the transaction.

Other steps must be completed before officially becoming the owner of your practice. The transaction must be organized and finalized.

At the finish line
With the contract in hand, you’re almost there! Before signing, you must:

• Obtain your registration number: NEQ, GST/QST, etc.
• Apply to the appropriate regulatory agencies: RAMQ, etc.
• Have insurance: property & casualty, life, disability
• Plan the transition and set up the accounting
• Prepare the legal closing documents

You must also be sure to notify your professional corporation of the transaction and comply with the regulation governing your profession.

Make things easier for yourself
To become owner of your practice, you should leave nothing to chance. It’s a rigorous and demanding process for one person to handle. You should have people to assist you and advise you.

The Financial gives you access to all the resources you need to help you make the right choices.

Professionals you can trust
For more detailed answers and a thorough analysis of your situation, place your trust in one of our advisors.