How can I tell what a walk-in clinic owner really earns?
Ask the seller’s accountant to rebuild the earnings with you. Separate what the clinic itself takes in from what physicians earn on their own work, then adjust for the owner’s own shifts, locum cover, staff, rent and any one-off income. The adjusted figure is a starting point for your accountant to test.
Check whether the profit on a seller’s statement is what you would take home. If the owner works as a physician in the clinic, their pay as a doctor may be mixed with their return as a business owner. First, you need to see the clinic’s earnings without that mix. An accountant can help.
Clinic income versus physician income
Ask what the clinic itself collects, such as fees from physicians who work there, and what each physician earns personally and keeps. Those are different streams. If the statements blend them, ask for them to be separated. How billing works is a question for your lawyer and accountant.
The owner’s own shifts
If the owner works shifts, ask what it would cost to cover them. A new owner may need a locum or another associate, and that cost reduces earnings. Ask what the owner is paid for their own work, and adjust for a fair wage.
Staff, rent and one-off items
Compare staff costs and rent with what you would pay under your own arrangements, and ask whether the lease will change. Look for extra revenue that will not repeat, such as a single contract or a one-time sale of equipment. Remove it from the base or note it separately. For a wider review, see how to find a walk-in or medical clinic for sale.
- Ask for statements that separate clinic income from physician income
- Cost out the owner’s shifts and any locum cover
- Compare staff and rent with your own plans
- Flag income that will not repeat
Related reading
10 pages on the same subject, grouped by topic.
Valuation
Due diligence
Buying
- GuideBuying a medical clinic or family practice in Canada
- Expert answerHow can I tell what a medical billing business really earns?
- Expert answerHow can I tell if a private medical lab is profitable?
- Expert answerHow do I find a walk-in or medical clinic for sale?
- Expert answerCan I take over the OHIP billing number when I buy a medical practice?
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat are financial statements?
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 03Business Development Bank of CanadaGovernmentEarnings before interest and taxes (EBIT)
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