Buying a healthcare practice is more than likely one of the biggest financial decisions you will make as a healthcare professional. It’s an exciting step, but when you’re outlaying a significant amount of money, it can also come with risks. From inflated asking prices to hidden financial issues, what looks like a great opportunity on paper could become a costly mistake without the right checks in place before you purchase. That’s where due diligence comes in.
How do you know what a healthcare practice is worth?
Pricing a healthcare practice is very different to pricing a house for sale, and it’s not always easy to know what a practice is really worth. Sellers often highlight the strengths of the business – its loyal patient base, modern equipment, or suburb demographics. But that doesn’t always give a full picture of its value. A practice’s worth depends on a range of factors, including profitability, lease terms, staff costs, systems, and goodwill.
For most healthcare professionals, understanding how these pieces come together to impact value isn’t easy. Without help from someone who knows what to look for, it’s easy to miss critical red flags – or walk away from a genuinely good opportunity out of caution and fear of the unknown.
The due diligence process
That’s why a proper due diligence process is essential before signing on the dotted line. It’s your chance to understand the true state of the business you’re buying. A thorough review should cover:
- Financial analysis: Profit and loss statements, tax returns, bank statements, and forecasts.
- Human resources: Wages, contracts, superannuation obligations, and entitlements.
- Legal and compliance: Tax compliance, plus lease terms, and any potential risks of the property lease.
- Market analysis: Patient numbers, retention and demographics.
- Equipment and assets: Age and condition, and if replacement is required.
Going through each of these steps provides a clear view of whether the practice is a sound investment, and helps determine what its fair market value really is. It gives buyers the ability to negotiate with confidence, plan for any future improvements, and avoid surprises once they take over.
Specialist support for a smarter purchase
This is where Amalgam Advisors can help. Our team works exclusively with dentists, doctors, and vets, so we understand the specific challenges and financial structures within healthcare practices. Our due diligence process is designed to be practical and thorough, uncovering any risks while giving you the clarity you need to move forward. We don’t just look at the numbers – we interpret them in the context of your profession and future plans.
Whether you’re buying your first practice or expanding your business assets, we make sure you’re not going in blind. With clear reporting, tailored advice, and honest insights, our team is here to support you at every step of the process. We will work closely with your legal advisors – or connect you with our trusted partners – to make the process smooth and efficient and allowing you to focus on the bigger picture.
If you’re considering purchasing a healthcare practice, don’t rush in without the right support. Due diligence isn’t just a formality – it’s your best defence against making a costly mistake. Give the Amalgam Advisors team a call on 1300 604 380 to learn how we can help you make a confident and informed practice purchase.
