The Practice Acquisition Process: A Step-by-Step Timeline

The practice acquisition process usually runs eight to fourteen weeks from a signed letter of intent to a wire hitting the seller’s account, though I’ve seen clean files close faster and messy ones drag well past that. The variable isn’t paperwork speed — it’s how quickly your collections history, payer mix, and valuation support hold up under underwriting. In my experience, buyers who understand where the time actually goes stop panicking at week six when nothing seems to be happening, because that’s usually the underwriter reconciling three years of production reports against your P&L.

Letter of Intent: The Clock Starts, But Slowly

The LOI sets price, terms, and a rough closing date, and it’s the document your lender will want to see first. It’s non-binding on most of the financial terms, which is exactly why lenders don’t lend against it — they lend against what the practice’s numbers actually show once someone starts pulling them apart. This is also the point where I tell clients to start gathering three years of tax returns, practice management system reports, and a payer mix breakdown, because whoever waits until under contract to organize this loses two or three weeks they didn’t need to lose.

If the deal involves buying into a group rather than acquiring the whole practice, the process branches a bit — valuing and financing a partner buy-in follows a related but distinct underwriting path, since you’re financing equity in an existing entity rather than a full change of ownership.

Collections and Payer Mix Review: Where the Real Time Goes

This is the step people underestimate most in the practice acquisition process. Underwriters aren’t just confirming revenue — they’re testing whether that revenue is durable. That means:

• Trailing 24-36 months of collections, not just billed production, since the gap between the two tells a lender a lot about a practice’s actual cash flow
• Payer concentration — how much comes from a handful of insurance contracts versus a broad mix, and what happens to the numbers if one contract disappears
• Cash-pay percentage for practices where that’s a meaningful slice of revenue, since it behaves differently than insurance reimbursement in a downturn
• Provider-dependent revenue — production tied to the departing owner personally versus production the practice generates independent of who’s behind the chair

This review looks different by specialty. A chiropractic file gets scrutinized for cash-pay concentration, an optometry file for the split between optical and clinical revenue, and a physical therapy file for how much volume rides on a small number of referring physicians. If you’re buying a veterinary practice, expect questions about recurring wellness-plan revenue versus one-off procedures. None of this is a formality — it’s the substance of the underwrite, and it’s where most of the calendar time in a practice acquisition process actually goes.

Valuation and Add-Backs: Reconciling What the Practice Really Earns

Sellers and their advisors typically present adjusted EBITDA with owner add-backs layered in — personal auto, above-market rent to a related party, one-time equipment purchases, family members on payroll who don’t work there. Some of that is legitimate. Some of it doesn’t survive scrutiny. Lenders will want documentation behind every add-back, not just a spreadsheet line, and what actually counts as an add-back is one of the more common points of friction between buyer, seller, and lender in this stage.

Asset allocation between goodwill, equipment, and any real estate also matters for tax treatment on both sides of the transaction — that’s outside what I can advise on here, but the IRS has a straightforward explainer worth reviewing with your CPA on how Form 8594 allocates purchase price in an asset acquisition.

Deal Structure: Seller Notes, Standby Terms, and the Gap Between Price and Loan Amount

Very few practice deals fund at 100% of the purchase price through a single loan. Most involve a seller note covering some portion of the balance, often on standby terms that subordinate repayment for a period after closing. If there’s a gap between what the seller wants and what a lender will support, structuring a seller note to close that valuation gap is usually the mechanism, not a lower purchase price. Expect your lender to also look at your personal financial statement, credit history, and how much cash you’re bringing in — the equity injection required varies by file, and credit score is only one factor among several weighed together, not a single gate that decides approval on its own.

Real Estate: A Separate Track That Runs in Parallel

If the acquisition includes the building, or you’re negotiating a new lease with the seller as landlord, that workstream runs on its own timeline alongside the practice underwriting. Owning the real estate changes the file in ways worth understanding before you assume it’s simpler — see how a building purchase changes the underwriting and how a combined transaction often becomes one deal financed as two loans rather than a single note.

Where SBA Financing Fits

Many practice acquisitions end up financed through an SBA 7(a) or 504 structure, and if that’s the likely fit for your deal, it’s worth reviewing separately — see our SBA loan programs for how those mechanics, guarantees, and eligibility rules work, since that’s a distinct topic from the practice-specific underwriting covered here.

From Approval to Funding

Once the lender issues a commitment, the remaining weeks typically go to final appraisal or equipment valuation (if applicable), landlord estoppel or lease assignment paperwork, licensing transfer with your state board, and payer credentialing updates — the last of which can quietly become the longest pole in the tent if it’s not started early. I tell clients to get provider enrollment paperwork moving with major payers the moment the LOI is signed, not after closing, because a gap in in-network status after a change of ownership can stall collections even when the loan itself funded on schedule.

FAQ

How long does the practice acquisition process usually take?

Most transactions run eight to fourteen weeks from a signed LOI to funding, though timelines vary based on how quickly financial documentation, payer credentialing, and any real estate component come together. Nothing here is a promise about your specific timeline — every file is different.

What slows down a practice acquisition process the most?

In my experience, it’s usually incomplete or disorganized collections history, unresolved add-back documentation, or payer credentialing that wasn’t started early enough. Real estate and lease negotiations can also add time if they aren’t running in parallel with the practice underwriting.

Do I need a certain credit score to move through the process?

Credit score is one of several factors lenders weigh alongside cash flow, collections trends, industry experience, and the equity you’re bringing to the deal — see what credit score expectations actually look like for a more detailed breakdown. No single factor guarantees or rules out approval on its own.

This article is for general information and isn’t tax, legal, accounting, or medical practice advice. Programs, terms, and underwriting standards are subject to credit approval and can change.

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This article is general education, not financial advice or a commitment to lend. Loan programs, terms, and availability are subject to credit approval and may change. Loanatik LLC is an Equal Housing Lender. See our licensing & disclosures.