How can I finance a partner buy-in to a professional practice?

A buy-in means buying an ownership interest in a practice, usually one you already work in, rather than buying the whole thing. That changes the financing in two ways. You are buying an interest, not a bundle of assets, and in a regulated profession the regulator controls who may hold that interest. Both belong in the conversation with a lender from the start.

The regulator comes first

Each profession’s regulator sets its own ownership rules, so the position differs by profession and province. In Ontario, the College of Opticians says all officers, directors and shareholders of an optician’s professional corporation must be its registrants. In British Columbia, CPABC requires a partner, shareholder or proprietor of a public practice firm to hold a licence, and asks the firm to confirm the date a member becomes a partner and whether the interest is held personally or through a professional accounting corporation.

Which loans fit a buy-in

The CSBF program’s guidelines say the acquisition of shares is not eligible for a CSBF loan, though goodwill counts as an eligible intangible asset when it is part of a going-concern purchase. BDC says its purchase loan can provide extra financing for goodwill and client lists, and it asks whether a deal is an asset or a share purchase. Ask each lender which of the two your buy-in is, and how it treats it.

Putting the funding together

BDC says a structure may combine your own investment, a business loan and seller financing, and it can refinance seller financing. In a buy-in the seller may stay on as a partner, so a payment arrangement with them is a practical option to raise. CPABC also permits members to hold their shares or partnership interest through a holding company, subject to its requirements, which can affect who borrows. For whole-practice purchases, see financing a practice acquisition.