Purchase and Sale of an Optometry Practice

For many optometrists, their practice is one of the most valuable assets they own and selling or purchasing an optometry practice is one of the biggest decisions of an optometrist’s career. The proceeds of sale of the optometry practice will form a significant portion of the selling optometrist’s estate and will likely impact their retirement plan. If an optometrist determines that he or she wants to sell their practice, it is important to develop and execute a plan, well in advance of the sale, to prepare the business in order to obtain the best price for the practice. Advance planning for the sale of an optometry practice ensures that the optometrist has enough time to fully consider and evaluate the financial and tax implications of selling a practice and allows the optometrist to develop a strategy to ensure a smooth and successful transition.

There are many considerations that should be made with respect to the sale or purchase of an optometry practice including any financing requirements of the buyer and how these requirements may impact the timing of the sale. It is not uncommon for one of the conditions of the sale to require the selling optometrist to continue practicing as an associate of the practice for a period of time following the closing of the sale in order to help preserve the goodwill of the practice. This may have an impact on the timing of the sale, the transition plan of the selling optometrist as well as their potential timing of retirement.

The sale of an optometry practice can be achieved in one of two ways: either through the sale of shares held in the professional corporation or the sale of assets. The option to sell shares of an optometry practice provides a potential opportunity for the selling optometrist to claim a lifetime capital gains exemption on the gain from the sale, provided that certain conditions are met. Early planning for a sale will allow the seller to make sure that the shares of the corporation will qualify for the capital gains exemption, and to engage a specialized legal and accounting team to help them with preparations for the sale. Determining whether to structure the sale as an asset sale or a share sale is usually dependent on the tax implications associated with each option. We routinely assist optometrists who are planning to purchase a practice or sell their practice and we work directly with their accountants and tax advisors to identify the most appropriate strategies in order to minimize the tax consequences associated with the sale or purchase, taking into account the needs and goals of our clients. 

If an OPC is preparing for the sale of a practice, prior to the completion of the sale, both the seller and the purchaser must inform the COO in writing of the transaction so that the OPC may continue to hold the Certificate of Authorization while the transaction is in progress. Once the transaction is complete, the purchaser can apply for a revised Certificate of Authorization. If the COO does not receive such notification, the purchaser must apply for a new Certificate of Authorization.

The amalgamation of an OPC with another corporation has a significant effect on the Certificate of Authorization of the amalgamated OPC. Upon amalgamation, a newly amalgamated corporation is created, and the Certificate of Authorization issued to the OPC prior to amalgamation is no longer valid. As such, before the newly amalgamated OPC may practice optometry, it must obtain a new Certificate of Authorization from the COO by completing the application process. 

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