Considerations when buying a practice

Q:I'm a young doctor, and the plan is that I take over my father's and his partner's practice in the next few years. As exciting as it may be, I have some concerns about retaining the value of their practice, preserving the assets they have worked so hard to develop, and continuing their legacy as caring and nurturing doctors. What suggestions do you have to help us through their retirement transition?

Retirement income needs of the senior sellers need to be determined in terms of dollar amounts and the flow of the dollars to them over time. Often, in a family arrangement, the sellers will finance the sale over 10 or 20 years at a reasonable interest rate, which allows the junior buyers to purchase with low or no money down and to spread the payments out over time. Doing so allows the future cash flow of the practice to pay for the purchase more comfortably while allowing the junior purchaser, through salary and profits, to afford the desired lifestyle for his family and contribute to a retirement plan.

Dan Deighan, CLU, CFC, is founder and principal of Deighan Financial Advisers in Melbourne, Florida. He has counseled clients since the firm's inception in 1974. Learn more by visiting http://www.deighanfa.com. Send your money management questions to memoney@advanstar.com