In this informative video, Dr. Athena Brasfield of OptaZoom.com breaks down the critical due diligence steps every buyer should take when evaluating an optometry practice.

She outlines the key financial and operational data you need to review to determine the value of a practice and make a confident offer.

Here are the major areas she covers:

1. Tax Returns (Last 3 Years)

Understanding a practice’s profitability starts with reviewing at least three years of tax returns. Depending on the structure, you'll be looking at Schedule C, Form 1065 and K-1s, or Forms 1120/1120S.

2. Financial Statements

Gather all available documentation, including:

* Profit and loss statements

* Income and expense reports

* Balance sheets

* Debt schedules (short- and long-term debt, maturity dates, liabilities)

* Depreciation schedules

* Accounts receivable and payable

3. Assets & Equipment

Take inventory of all practice assets—especially optometric equipment. Assess each item’s age and fair market value to understand the tangible value you're acquiring.

4. Optical Inventory & Competition

Review inventory levels and wholesale costs of frames, lenses, and contacts. Also, analyze local competition: other ODs, optical shops, and chains competing for the same patients.

5. Operational Details

Other essential areas to evaluate include:

* Patient volume and demographics

* Fee schedules

* Staff roles and employment terms

* Promotional and marketing materials

* Ownership structure

6. Legal & Compliance Considerations

Ask for documentation regarding:

* Property taxes

* Service contracts

* Licenses and permits

* Third-party payor agreements

* Payroll and employment taxes

* Benefit plans (retirement, sick leave, vacation)

* Liens, mortgages, and UCC filings

Dr. Brasfield emphasizes that while the due diligence process is extensive, it’s essential to ensuring a smooth and profitable transition into ownership.

Following her checklist will help you uncover red flags, understand the practice’s true value, and ultimately make a smarter purchase.

Stay tuned for more expert insights on practice management from OptaZoom.