Finance for Buying a Professional Practice
Every cost of the transaction,
not just the price.
A practice purchase needs funding for more than the agreed price. This is what typically needs funding, in the order it tends to arise.
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Quick answer
What professional practice funding is available to buy a practice?
Buying a practice is usually funded with a term loan for the goodwill, commercial mortgage-style lending for any premises, asset finance for equipment and a working capital facility for the months after completion, with deferred consideration from the seller reducing what is needed on day one. As a whole-of-market broker we help structure each part and search the market for lenders who understand professional practices.
The picture
The headline price is rarely the whole bill.
Buyers naturally focus on the price agreed with the vendor. Lenders, and the completion statement, look wider: goodwill, premises, stock, equipment, deferred instalments, professional fees, stamp duty where property is involved, and the cash the practice needs on the first day under new ownership.
Each of those costs can be funded differently. Goodwill is usually funded with a term loan against the practice’s cash flow. Premises may suit a commercial mortgage. Equipment can be funded with asset finance. Deferred consideration may be left with the vendor or replaced with a single payment. Putting the right funding against each part of the deal is often what makes the numbers work.
The order matters too. Lenders will want to see the heads of terms, the practice’s accounts and your own contribution before they commit, and regulatory approvals can set the pace of completion. Starting the funding conversation early keeps the transaction on its timetable.
The journey, step by step
- 1
Goodwill
Often the largest part of the price, and the part lenders look at most closely: how the fees or patient list are made up, how much of the income follows the vendor personally, and how it will transfer.
- 2
Premises
Where the freehold is part of the deal, or you want to buy it separately. Some buyers keep the property outside the practice, for example in a separate company or a pension scheme, which is a question for your accountant.
- 3
Deferred consideration
Later instalments due to the vendor, often linked to client retention, or replacing them with a single payment where that improves the deal.
- 4
Stock and equipment
Stock on day one for pharmacies and opticians, and any equipment upgrades you plan to make soon after completion.
- 5
Fit-out
Refreshing the practice under new ownership, from surgeries and consulting rooms to reception and signage.
- 6
Working capital after completion
Payroll, integration and the gap before income settles. In practices that bill in arrears, the vendor usually keeps the debtors, so the buyer starts with an empty ledger.
- 7
PII run-off, where relevant
For regulated professions, run-off cover can be a significant payment on a merger or acquisition. Establish early who is paying for it.
Buying a practice, by profession
Professional practice finance for your profession
The costs of a purchase are similar across professions, but lenders weigh them differently. Start with the page for your profession, then see practice acquisition finance for how a deal is structured.
- Dental practice loans: goodwill, NHS and private income, equipment and surgeries
- Veterinary practice loans: independent buyers, diagnostics and premises
- Accountancy practice loans: fee blocks, whole practices and deferred consideration
- Solicitor practice loans: firms, practice areas, WIP and run-off cover
- Pharmacy loans: goodwill, stock and the NHS change of ownership
- GP and medical practice loans: mergers, partner capital and premises
- Optician practice finance, funeral director finance, advisory firm finance and every other profession
Ready to compare options? Get instant quotes for a practice purchase.
Things to consider
Where acquisitions usually go wrong.
Funding only the price
The deal completes and the practice is immediately short of cash for payroll, stock or the first VAT quarter. Budget the whole transaction, not just the consideration.
Agreeing terms before testing them
Heads of terms that a lender will not support, for example on how much is paid on completion, can mean renegotiating with the vendor at a late stage.
Underestimating the timetable
Due diligence, valuations, regulatory approvals and lease assignments all take time. Lender offers can expire if completion slips.
Ignoring what transfers
Staff, contracts, leases, WIP and debtors may or may not come with the practice. Each affects both the price and the cash you need.
Preparing the case
What lenders will look at.
- The target practice’s accounts, ideally for several years, and recent management figures
- The heads of terms: price, how it was calculated, what is paid on completion and what is deferred
- Your own accounts, if you already own a practice, and how the two will combine
- Your experience and your contribution to the deal
- The premises position: freehold, lease terms and any assignment
- Regulatory registrations and contracts that need to transfer
Different lenders take different views on goodwill, deferred consideration and retention risk. We know where to take each type of deal. How it works →
- Whole of market accessHigh street banks, specialist and private lenders.
- Specialist understandingLenders who understand how practices earn and grow.
- Your case, properly presentedStructured and put to lenders suited to it.
- With you to completionFrom the first conversation to funds arriving.
In our clients’ words
“Simon has raised a large level of funds for me on numerous occasions to assist me in the growth of my business through acquisition. He has never let me down when many others have, and I’m always amazed how he comes up with funding so quickly and efficiently.”
Questions
What owners usually ask.
How much deposit do I need to buy a practice?
It depends on the profession, the lender and the deal. Lenders usually want to see a meaningful contribution from the buyer, but vendor deferred consideration and separate funding for premises and equipment can reduce the amount you need on completion.
Can the practice’s freehold be funded as part of the purchase?
Often, yes, either within one package or with a separate commercial mortgage. Whether it should be depends on the price, the valuation and your plans for the property.
Does the vendor’s debtor book come with the practice?
Not always. Many practice sales leave debtors and WIP with the seller, so the buyer needs working capital to cover the gap before new fees are collected. It is worth checking early.
Can I buy more than one practice at once?
Yes, and some lenders specialise in group acquisitions. The case needs to show how the combined business will be managed and how the debt will be serviced across it.
What is professional practice funding?
Funding for professional practices, such as dental, veterinary, medical, legal and accountancy practices, assessed on the practice’s income and the people in it. For a purchase it typically covers goodwill, premises, equipment, deferred consideration and working capital. See practice acquisition finance.
Should I speak to a broker before I make an offer on a practice?
It helps. Knowing what lenders are likely to support before heads of terms can shape what you offer and how much is paid on completion. You can get instant quotes or book a call to talk it through.
Knowledge Hub
Read the guides.
Buying a Professional Practice: Every Cost You Need to Fund
A cross-profession checklist of what you need to fund when buying a law, accountancy, vet, pharmacy, optician, funeral, medical or architects’ practice, and the order to arrange it in.
Read the guide →Buying a Dental Practice: A Finance Guide for Buyers
A practical guide to funding a dental practice purchase: how the NHS and private income mix affects lenders, the approvals involved, and the order to put the finance together.
Read the guide →Fee Block Finance: How Accountancy and Advisory Practices Fund Buying a Client Book
A practical guide to financing a fee block purchase: how deals are priced and structured, what lenders look at, and how to protect cash flow while the clients bed in.
Read the guide →Let's talk
Finance for
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