General practice tool kit

Becoming an owner of a general practice

Buying all or some of an existing practice

Last revised: 24 Oct 2019

Assessing an existing practice

When deciding to buy all or some of an existing practice, you will also need to assess the practice, as explained below, to make sure that it is the right business for you.

  • Consider the current financial stability and viability of the practice: is it making enough money to provide you with an appropriate income and to help reduce any loans you will need?
  • Will the business structure and/or plan need to be changed? For example, if you’re buying into a practice currently owned by just one other person, you may need to change the business structure.
  • Identify the ‘real’ costs and revenues of the practice (the type of business structure can affect how profits and losses are shown and distributed). Consider obtaining a professional business valuation.
  • What is the value of the practice’s ‘goodwill’? Goodwill is often what makes a business worth more than its tangible assets (such as the premises and equipment), and therefore needs to be valued, so you know what you are actually paying for. Goodwill will also be important when you are ready to move out of the business, sell it, or have other people buy into it.
  • Identify and evaluate the practice’s risk assessment and liabilities. For example, are there existing contracts you will need to honour, long service leave staff are going to take in the near future, are there future changes (eg to council regulations, developments, infrastructure) that will affect the viability of the practice?
  • Does the practice own or lease its premises? When does the lease end, and how likely is it that you will be able to continue the lease? What payments are due on the mortgage, and when are they due?
  • Is there opportunity for growth?
  • Are there opportunities for improvements?
  • Do you know the existing staff? Are they likely to stay at the practice?
  • Will you need additional staff?
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