Buying a professional practice in Canada

Buying a practice is closer to buying a relationship than buying a business. There is usually no storefront, no inventory, and often little in the way of equipment worth arguing over — the entire question is whether the clients on the billings summary will still be clients once the person they have dealt with for years steps back. That question drives almost every part of how a practice purchase should be approached, from how you price it to how you plan your first year running it.

Confirm you are eligible to own it before anything else

Regulated professions generally have rules — set by the relevant provincial regulator or licensing body — about who can own or hold an interest in a practice, and those rules vary significantly by profession and by province. Before you spend real time or money on a specific practice, confirm directly with your regulator that you are licensed, or eligible to become licensed, to own and operate it. This is a prerequisite, not a detail to sort out later.

Test retention, not just the billings summary

A list of billings by client tells you what happened under the seller’s ownership; it does not tell you what will happen under yours. Ask how long-standing the relationships are, how much personal contact clients have had with the seller specifically versus the wider team, and whether any major clients have already been told about the sale. Where possible, structure part of the purchase price around actual retention after closing rather than paying entirely on the historical numbers.

Negotiate the transition, not just the price

How the outgoing professional introduces you to clients — jointly attending meetings, a co-signed announcement letter, a period of shared work before they fully step back — often matters as much to the deal’s success as the price itself. A seller who is available, engaged and genuinely invested in a smooth handover is worth more to you than one offering a slightly lower price with no transition support at all. Put the specifics in writing: how many introductions, over what period, and what happens if the seller becomes unavailable partway through.

Meet key clients before you commit, where you can

Where the seller is willing to arrange it, meeting a handful of the practice’s largest or longest-standing clients before you finalize the deal tells you more than any billings summary. You are listening for how they talk about the relationship — whether it is with the practice or specifically with the departing professional — and whether they seem aware a sale is even under consideration. Not every seller will agree to this before a deal is signed, for confidentiality reasons, but where it is possible it is one of the most useful diligence steps available in a practice purchase.

Work-in-progress and receivables are part of the deal

A practice purchase usually involves decisions about unbilled work-in-progress and outstanding accounts receivable as of the closing date — who collects them, who is entitled to the proceeds, and who is responsible for finishing work the seller had already started. These are often negotiated as their own line items apart from the headline purchase price, in much the same way a retail buyer negotiates inventory separately from the business itself. Get the mechanism agreed and documented before closing rather than assuming it will sort itself out afterward.

• Confirm your regulator’s ownership and licensing rules apply to your situation
• Review billings by client to assess concentration and retention risk
• Negotiate a transition period with the outgoing professional in writing
• Confirm which client files can transfer, and what consent is required
• Line up financing that fits a practice’s cash-flow-based value

Understand the restrictive covenant you are relying on

Part of what you are paying for is the seller’s agreement not to compete for the same clients afterward. Canadian courts scrutinize these covenants closely, and one that is vague, overly broad, or copied from an unrelated template is a weaker protection than it looks on paper. Have a lawyer draft or review the covenant specifically for this deal, tied to the actual clients and geography involved, rather than reusing language from a different kind of agreement.

Financing a practice is different from financing a storefront

Lenders underwriting a practice purchase are looking at cash flow and retention risk rather than hard collateral, since there is often little equipment or inventory to secure the loan against. Government-backed small business financing programs, a lender’s own term debt, and a vendor take-back from the seller are all common pieces of how these deals get financed — get a realistic sense of what a lender will actually support before you commit to a price.