For optometrists considering practice ownership, understanding how a lender evaluates an acquisition can be just as important as understanding the practice itself.
That was the focus of Through a Banker’s Lens: Buying an Optometric Practice, the latest webinar in the Optometry Practice Strategies Series – Build • Grow • Transition, presented by Rachel McKay and Christopher Crofoot of CIBC Commercial Banking.
The session examined the acquisition process from the bank’s point of view, combining an overview of key financial concepts with a deeper look at how lenders assess an optometric practice purchase and the prospective borrower behind it.
Looking Beyond the Purchase Price
One of the central themes of the presentation was that financing an acquisition involves much more than determining whether a buyer can support the purchase price.
Banks look at the overall strength of the opportunity, including the financial performance of the practice, its historical results, the structure of the transaction and the buyer’s ability to operate the business successfully after closing.
For prospective owners, that means developing a clear understanding of both the practice being purchased and their own financial position before entering the financing process.
McKay and Crofoot discussed the importance of reviewing financial statements carefully, understanding cash flow and recognizing how debt servicing fits within the broader economics of the practice.
The goal is not simply to determine whether a transaction can be financed, but whether the business can support the financing while continuing to operate effectively.
The Buyer Matters Too
While the numbers associated with the practice are important, lenders also evaluate the person or group making the acquisition.
Professional experience, financial preparedness, available capital and the buyer’s overall plan for the practice can all form part of that assessment.
The presentation highlighted the value of approaching a lender early in the process rather than waiting until a purchase agreement is already in place.
Early conversations can help prospective buyers understand what information will be required, identify potential financing considerations and better assess what size and type of acquisition may be realistic.
For optometrists considering ownership in the future, this also means that financial preparation can begin well before a specific practice is identified.
Understanding the Practice as a Business
The session also reinforced a broader point that extends beyond financing: purchasing an optometric practice is both a professional and a business decision.
Buyers need to understand the underlying economics of the practice, including revenue, expenses, profitability and future capital requirements, as well as factors that may affect the stability and growth potential of the business.
That financial literacy becomes increasingly important when evaluating competing opportunities or determining whether the economics of a transaction align with personal and professional goals.
For practitioners acquiring an additional location, many of the same considerations apply, although the financing discussion may also take into account the strength and performance of the buyer’s existing operations.
Preparing for the Financing Conversation
For prospective buyers, one of the practical takeaways from the webinar was the importance of preparation.
Having organized financial information, understanding the economics of the proposed acquisition and being able to articulate a clear business plan can help create a more productive discussion with a lender.
The financing process may also involve coordination among several advisors, including accountants, lawyers, practice valuators and other professionals involved in the transaction.
Engaging those resources early can help buyers understand both the opportunities and the obligations associated with practice ownership.
Part of a Broader Practice Strategy
Through a Banker’s Lens was presented as part of Eye Care Business Canada’s national Optometry Practice Strategies Series, which explores the business issues optometrists encounter as they build, grow and eventually transition their practices.
The webinar was supported by CIBC Commercial Banking.
A recording of the presentation is available for optometrists who would like to learn more about how banks approach practice acquisition financing.
Watch the webinar recording: https://youtu.be/gqBApHBGIBA
Explore the Optometry Practice Strategies Series: https://vuepoint.ac-page.com/ODPracticeStrategySeries
