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Last updated: May 2026

Healthcare & professional practice referrals

Practice Acquisition Financing: How Healthcare and Professional Practice Buyers Get Funded

Practice acquisition financing sits at the intersection of commercial lending and professional services — a combination that creates both significant opportunity and specific complexity for buyers, sellers, and the advisors who serve them. For referral partners embedded in healthcare and professional services, practice acquisitions represent high-value transactions with consistent demand and a clear financing need that most banks handle imperfectly. Understanding how practice acquisition financing works, what lenders evaluate, and how to identify and submit these deals positions referral partners to place some of the most valuable transactions in their pipeline.

Review the Referral Agreement Send a Deal
  • SBA 7(a) most common vehicle — 10-year terms, 10%–15% buyer injection
  • Dental, medical, veterinary, optometry, CPA, and law firm acquisitions all eligible
  • Referral fees on funded acquisition deals — 0.5%–1% of funded amount

Table of Contents

What Practice Acquisition Financing Is

Practice acquisition financing is commercial lending used to purchase an existing professional practice rather than starting one from scratch. The buyer is acquiring a going concern — a business with existing revenue, patients or clients, staff, systems, and market position — rather than building all of those elements from the ground up.

The practices that most commonly require acquisition financing include medical and physician practices, dental practices (general and specialty), veterinary practices, optometry and ophthalmology practices, CPA and accounting firms, law firms, physical therapy and chiropractic practices, and other fee-for-service professional businesses with recurring patient or client relationships.

What all of these practice types have in common is that a significant portion of their value is intangible — goodwill, established patient or client relationships, the reputation of the practitioners, and the operational infrastructure that generates recurring revenue. This is in contrast to asset-heavy businesses like manufacturing or real estate, where the tangible assets provide more straightforward collateral for lenders.

For buyers, an acquisition has significant advantages over a startup: established revenue from day one, a known patient or client base, trained staff, contracts with payers or vendors already in place, and a physical location that is already operational. For lenders, the acquisition also has advantages over a startup: historical cash flow data that supports underwriting, a proven revenue model, and a seller who (in most cases) has an interest in seeing the transition succeed because they typically have a note, a consulting arrangement, or professional reputation at stake in the outcome.

The financing challenge is that the value being purchased is concentrated in intangibles. Traditional bank lending is more comfortable with hard asset collateral than with goodwill. This mismatch between what practice acquisitions are worth and what traditional lenders will underwrite is why SBA lending programs and specialty practice finance lenders exist — and why referral partners who understand this space find consistent placement opportunities.

Why Practice Acquisitions Are a Distinct Financing Category

Several characteristics of professional practice acquisitions set them apart from standard commercial loans and require lenders with specific expertise to evaluate properly:

  • Goodwill valuation. In most practice acquisitions, goodwill — the intangible value of the established patient or client relationships, the practice's reputation, and the systems and processes in place — represents 50% to 80% of the total purchase price. A dental practice with $1 million in annual revenue might be valued at $700,000 to $900,000, with hard assets (equipment, leasehold improvements) worth $100,000 to $150,000 and the remainder representing goodwill. Standard commercial lenders are uncomfortable with this ratio; practice finance lenders are built around it.
  • Patient or client base retention risk. The core underwriting uncertainty in a practice acquisition is whether the patients or clients will stay after the ownership transition. In a highly personal relationship-based practice — a solo physician with a twenty-year patient panel, or a boutique law firm where clients have relationships with a specific attorney — the risk that a significant portion of revenue leaves with the seller is real. Lenders assess this risk through the transition plan, the seller's commitment to a post-sale support period, and the structural characteristics of the patient or client relationships.
  • Revenue concentration. Healthcare practices are often dependent on a small number of payer relationships — Medicare, Medicaid, or a few major commercial insurers. If payer mix changes or a primary payer modifies reimbursement rates, practice revenue can shift significantly. Lenders who specialize in healthcare practice financing understand payer mix risk in a way generalist commercial lenders do not.
  • Regulatory and credentialing considerations. Healthcare practices operate under licenses, certifications, and payer enrollment agreements that are specific to the individual provider, not the practice entity. A medical practice acquisition requires the buyer to obtain their own payer enrollments — a process that can take months and creates a gap in revenue during the transition. The buyer must also verify that their credentials are accepted by the practice's current payers, that any required licenses are transferred or reissued, and that any regulatory requirements specific to the practice type and state are met.
  • Transfer and succession logistics. Practice acquisitions involve more operational complexity at closing than a typical asset purchase. The seller typically remains involved for a transition period — introducing patients or clients to the new owner, supporting the operational handover, and often carrying a seller note that ties their financial interests to the success of the transition. The structure of the seller's continued involvement significantly affects how lenders evaluate the deal.

For referral partners, understanding these distinguishing characteristics helps with both deal identification and deal packaging. A referral that includes context about the transition plan, seller involvement, patient retention structure, and payer mix gives a lender the information they need to evaluate the intangible risk — and moves the deal forward significantly faster than a submission that only includes the basic financial statements.

Types of Practice Acquisition Financing

Practice acquisitions are financed through several different structures, often in combination. The right structure depends on the deal size, the buyer's financial profile, the specific practice type, and the seller's willingness to carry part of the purchase price.

SBA 7(a) practice acquisition loans

The SBA 7(a) program is the most widely used financing vehicle for professional practice acquisitions. SBA 7(a) loans can fund up to $5 million (with higher limits available in certain circumstances), with terms of 10 years for practice acquisitions and 25 years when real estate is included. The SBA guaranty reduces the lender's risk on the intangible-heavy collateral that characterizes practice acquisitions — which is precisely why SBA lending became the standard for this transaction type. Buyers typically need to inject 10%–15% of the total project cost from personal liquid assets. SBA lenders who specialize in healthcare practice acquisitions have deep experience with the specific documentation and underwriting requirements.

Conventional practice loan programs

Several banks and specialty lenders offer conventional practice acquisition loan programs outside of SBA. These programs are typically designed for larger deals (above $2 million) or for buyers with strong credit profiles who can support more rigorous collateral and down payment requirements. Conventional programs may offer faster processing than SBA financing and may have fewer documentation requirements for well-qualified borrowers. The tradeoff is typically a larger buyer injection requirement — often 20%–30% of the purchase price compared to the SBA's 10%–15% — and stronger personal credit and liquidity requirements.

Seller financing

Seller financing — where the selling practitioner carries part of the purchase price as a note — is common in practice acquisitions and serves multiple purposes. It reduces the amount the buyer needs to finance through a bank or SBA lender, it demonstrates the seller's confidence in the practice's ability to support the purchase price, and it aligns the seller's financial interests with the success of the transition. Many practice acquisition deals include a combination of institutional financing and a seller note — for example, a buyer using an SBA 7(a) loan to cover 75% of the purchase price and the seller carrying a 5-year note for the remaining 25%. Some institutional lenders require or strongly prefer that sellers carry a note as a condition of financing.

Bank practice lending programs

Some regional and national banks have dedicated practice lending divisions that specialize in healthcare and professional practice acquisitions. These programs combine commercial lending expertise with deep knowledge of specific practice types — dental, veterinary, medical — and often have pre-qualified structures for common acquisition scenarios within their target practice categories. Bank practice programs typically offer competitive terms for well-qualified buyers within the bank's target specialty, and they may include additional services (operating accounts, equipment financing, working capital lines) that make them attractive as a comprehensive banking relationship.

Alternative and post-decline financing

When a practice acquisition is declined by a bank or falls outside SBA program eligibility, alternative financing pathways may still be available. Alternative lenders evaluate practice acquisitions using cash flow underwriting that may be more favorable to goodwill-heavy deals than traditional collateral-based underwriting. These options carry higher effective cost than SBA or conventional financing but can bridge a gap when the primary financing route is blocked — for example, when a buyer's credit doesn't meet a bank's threshold, when the deal structure doesn't fit standard SBA requirements, or when timing requires closing faster than SBA processing allows.

What Lenders Evaluate in Practice Acquisition Deals

Practice acquisition underwriting differs from standard commercial lending because the most important assets being financed — goodwill and patient or client relationships — cannot be liquidated to recover a lender's investment if the deal goes wrong. This makes practice acquisition lenders focus intensely on operational and transition factors that standard commercial lenders typically ignore.

Practice revenue and EBITDA

Lenders review two to three years of practice financial statements to establish the baseline revenue and EBITDA. Revenue is typically normalized for owner compensation — removing or adjusting what the selling practitioner paid themselves to a market-rate equivalent — to produce a more accurate picture of the cash flow the practice actually generates. The debt service coverage ratio (DSCR) is calculated against this normalized EBITDA to determine whether the practice's cash flow can support the proposed debt service under the buyer's ownership.

Buyer's professional credentials and experience

Lenders weight the buyer's qualifications heavily because practice acquisition risk is fundamentally about whether the new owner can retain the existing patient or client base and maintain revenue. A buyer who is already licensed in the relevant specialty, has experience in the practice type, and ideally has some prior ownership or management experience represents lower transition risk. A new graduate buying their first practice is a higher-risk scenario — not necessarily unfundable, but underwritten more conservatively.

Payer mix for healthcare practices

For medical, dental, and other healthcare practices, the composition of the revenue by payer — Medicare, Medicaid, commercial insurance, and private pay — is a critical underwriting factor. A practice heavily dependent on a single large payer is more vulnerable to reimbursement rate changes than one with diversified payer relationships. Lenders also evaluate whether the buyer can get enrolled with the practice's existing payers under their own credentials, and what the timing and revenue gap looks like during the enrollment process.

Patient or client retention assumptions

Every practice acquisition model assumes some level of patient or client attrition when ownership changes. The question is how much. Lenders review the seller's transition plan — how long they will stay after closing, how they will introduce patients or clients to the new owner, and what support they will provide during the handover — as the primary mitigation for attrition risk. Sellers who commit to a structured 6–12 month transition period generally produce better outcomes and stronger financing approvals than those who want to close on a Friday and be done on Monday.

Seller willingness to carry a note

Seller financing is both a structural tool and a signal. A seller who is willing to carry 10%–20% of the purchase price as a note is demonstrating confidence that the practice's revenue will support the debt service — because if it doesn't, the seller doesn't get paid. This alignment of seller incentives with practice performance is reassuring to institutional lenders and often a prerequisite for approval on deals where the goodwill-to-hard-asset ratio is high.

Overall deal structure and purchase agreement

Lenders review the purchase agreement carefully to understand what exactly is being purchased (assets vs. equity), how goodwill is valued and supported, what liabilities are excluded, what the seller's post-closing obligations are, and whether there are any contingencies or conditions that affect the transaction timeline. A well-structured purchase agreement that addresses transition, goodwill support, and seller obligations makes a practice acquisition deal significantly more financeable than one with loose or ambiguous terms.

Typical Terms and Deal Sizes by Practice Type

Practice acquisition financing terms and deal sizes vary significantly by practice type. These ranges reflect typical market transactions; actual terms depend on the specific deal, lender, buyer profile, and market conditions:

Practice type Typical acquisition range Common financing structure Typical buyer injection Key underwriting focus
Dental (general) $300,000–$1,500,000 SBA 7(a), 10-year term; seller note 10%–20% 10%–15% of total project Patient retention, payer mix, equipment condition
Dental (specialty: ortho, oral surgery) $500,000–$3,000,000+ SBA 7(a) or conventional; seller note common 10%–20% of total project Referral network retention, production per provider, facility
Medical / physician practice $500,000–$5,000,000+ SBA 7(a), conventional practice loan 10%–20% depending on deal size Payer enrollment timeline, revenue concentration, partner buyout structure
Veterinary $200,000–$2,000,000 SBA 7(a); specialty vet lenders active 10%–15% Client retention, specialty vs. general mix, facility quality
Optometry $150,000–$1,500,000 SBA 7(a); optical chain affiliations may affect structure 10%–15% Managed care dependency, equipment modernity, patient active base
CPA / accounting firm $100,000–$1,500,000 SBA 7(a); seller financing heavily weighted 10%–20%; seller note often required Client retention, service mix, buyer's CPA credentials
Law firm (small/boutique) $100,000–$1,000,000 SBA 7(a); seller note common; client consent issues unique 10%–20% Client portability, ethics rules on client notification, fee structure

SBA 7(a) financing for practice acquisitions typically carries a term of 10 years for the business portion and up to 25 years when real estate is included in the acquisition. Interest rates are variable, indexed to the prime rate or SOFR with an SBA-maximum spread. The 10-year term on a $700,000 dental practice acquisition translates to approximately $7,000–$8,000 per month in principal and interest at current market rates — which must be supported by the practice's normalized EBITDA with adequate coverage ratio remaining.

Who Refers Practice Acquisition Deals

Practice acquisition deals are primarily sourced through professional advisors who are already embedded in the transaction — either on the buyer's side, the seller's side, or both. These are the most common referral sources and why each is positioned to refer:

Healthcare attorneys

Attorneys who specialize in healthcare transactions — drafting and reviewing purchase agreements, handling regulatory compliance in the transfer, managing credentialing and enrollment issues — are the most naturally positioned referral source for practice acquisition deals. They see every significant transaction in their client base and are involved from the moment a buyer and seller reach preliminary agreement. A healthcare attorney who has a reliable commercial finance referral relationship can complete their client service by connecting buyers to financing, rather than leaving them to navigate lender selection on their own.

Practice management consultants

Practice management consultants who work with both buyers preparing for first-practice ownership and sellers preparing for transition are positioned on both sides of the acquisition market. They often see financing needs as a recurring challenge — buyers who have found the right practice but cannot close the financing gap, or sellers who need to help the buyer find financing to complete the transaction. Practice management consultants who refer these deals can earn meaningful referral fees on transactions that are already at an advanced stage in the process.

CPA firms specializing in healthcare

CPA firms that specialize in healthcare or professional services clients are often the advisors who normalize practice financials, assess practice value, and help buyers and sellers understand the tax implications of acquisition structures. They are deeply embedded in the financial mechanics of the transaction and are a natural referral source for the financing component. A CPA who has prepared normalized EBITDA for a practice being acquired already has most of the financial information a lender needs to underwrite the deal. See CPA referral program for more on how accountant referral relationships work.

Dental and medical brokers

Practice brokers — professionals who specialize in facilitating the sale and purchase of dental, medical, and other professional practices — are directly embedded in every transaction they represent. They manage the listing, marketing, buyer qualification, and deal negotiation for practice sales. Their buyers nearly always need financing to close, and brokers who have reliable financing referral relationships close more deals and serve their clients more completely. Practice brokers are some of the most productive referral sources in the practice acquisition space because they have a continuous pipeline of active transactions.

Newly licensed practitioners

A distinct but important referral source is the professional who is newly licensed and actively researching first-practice purchase options. These individuals are in the research phase — evaluating whether to buy an existing practice, start from scratch, or join as an associate with a path to ownership — and they often encounter financing as an early question in that process. Connecting them to practice acquisition financing resources during the research phase positions the referral partner for when the buyer is ready to move forward on a specific acquisition.

How Referral Partners Identify Practice Acquisition Candidates

Practice acquisition candidates appear in several ways in the professional advisor's client base. Referral partners who develop an instinct for these situations can identify them consistently rather than only when a client explicitly asks about financing:

  • Accounting clients transitioning out of practice ownership. A CPA or accountant whose client is approaching retirement or a career transition is working with a potential seller — and potential sellers need buyers who have financing. If the CPA has a relationship with a practice broker or directly with acquisition-focused buyers, they can connect the transition to a financing-ready outcome. Similarly, a selling practitioner who is structuring a sale may need the buyer to access specific financing structures (SBA, seller note combination) that the CPA can facilitate by making the right introductions.
  • Newly licensed practitioners in the client base. CPAs, attorneys, and practice management consultants who serve professional practices often have younger practitioners as clients — newly licensed physicians, dentists, veterinarians, or attorneys who are building their early careers. These individuals are likely acquisition candidates within the next 2–5 years. Referral partners who start the financing conversation early — before the buyer has a specific practice in mind — are positioned as the go-to resource when the opportunity actually arrives.
  • Multi-practice operators looking to expand. A dental group owner adding a second location, or a physician who owns one practice and is evaluating acquiring a second, is a recurring acquisition candidate. These buyers have the advantage of an operating history that supports underwriting and a clear strategic rationale for the acquisition. Multi-practice acquisitions are typically higher-value transactions that generate more significant referral fees.
  • Consultants with clients in business transition. Practice management consultants who work on exit planning, succession planning, or operational improvement often identify clients who are moving toward a sale or are evaluating whether to acquire a competitor. These transitions take time — months to years — and the referral partner who identifies the financing need early can build the relationship before the transaction pressure is acute.

The Referral Process for Practice Acquisition Deals

Practice acquisition deals have specific information requirements that allow a lender to begin evaluation efficiently. A well-packaged referral submission for a practice acquisition includes more context than a standard working capital referral — the intangible nature of the collateral requires more narrative to make the underwriting case.

  • Practice type and location. Dental, medical, veterinary, CPA firm, etc. The practice type immediately tells the lender what underwriting framework to apply and what specialty knowledge is relevant.
  • Acquisition structure overview. Asset purchase vs. equity purchase, approximate purchase price, goodwill percentage, and whether seller financing is anticipated. This determines which financing programs are applicable and how the collateral will be evaluated.
  • Practice financial summary. At minimum, the last two to three years of practice revenue and owner compensation. Normalized EBITDA if available. Payer mix breakdown for healthcare practices. This is the core underwriting data.
  • Buyer background. Professional credentials, years of experience, any prior ownership or relevant management experience. Lenders evaluate buyer risk as carefully as they evaluate practice risk.
  • Transition plan basics. How long the seller intends to remain after closing, how patients or clients will be notified, and any seller note structure that is already contemplated.
  • Financing amount needed. After accounting for the buyer's injection and any seller financing component, how much institutional financing is needed to close the deal?
  • Timeline. Is there a closing deadline driven by lease, seller, or other transaction factors? Timeline constraints affect which financing options are viable.
1

Sign the referral agreement

Establish the referral relationship before submitting deals. The referral agreement defines the fee structure, covered products, and prospect protection terms.

2

Identify the practice acquisition candidate

Determine whether the deal is a buyer seeking financing, a seller whose buyer needs financing, or an advisor working with either party. Gather the deal basics described above.

3

Submit with context

Submit through the referral form with enough context about the practice type, acquisition structure, financials, and buyer background for an initial evaluation to proceed.

4

Finance partner evaluates and routes

The financing partner reviews the deal, determines whether SBA, conventional, or alternative financing is most appropriate, and contacts the buyer directly to collect documentation and begin underwriting.

5

Deal closes, referral fee is paid

When the acquisition closes and funds, the referral fee is calculated on the funded amount and paid per the agreement. On a $700,000 practice acquisition with a 0.75% fee, that is a $5,250 referral payment.

FAQ

Questions about practice acquisition financing

What is practice acquisition financing?

Lending used to purchase an existing professional practice — medical, dental, veterinary, optometry, CPA firm, law firm, and similar fee-for-service businesses. Unlike standard commercial loans, practice acquisition financing must account for goodwill (intangible value) and patient or client retention risk rather than primarily relying on hard asset collateral. SBA 7(a) loans are the most common vehicle for acquisitions up to $5 million.

What do lenders look for when evaluating a practice acquisition?

Practice revenue and normalized EBITDA (last 2–3 years), buyer's professional credentials and experience, payer mix for healthcare practices, patient or client retention assumptions and transition plan, seller's willingness to carry a note, and overall deal structure. The transition plan and seller post-closing involvement are weighed more heavily than in standard commercial lending because practice value depends on relationship continuity.

What are typical deal sizes for practice acquisitions?

Dental practices typically $300,000–$1.5M; medical and physician practices $500,000–$5M+; veterinary practices $200,000–$2M; optometry $150,000–$1.5M; CPA firms $100,000–$1.5M; law firms $100,000–$1M for smaller boutiques. These are approximations — actual valuations depend on revenue, profitability, market, and transaction-specific dynamics.

Can a practice acquisition be financed after a bank decline?

Yes, in many cases. Bank declines for practice acquisitions often reflect policy constraints — limited appetite for goodwill-heavy collateral, industry exposure limits, or credit thresholds — rather than fundamental deal quality. Alternative lenders and specialty practice finance programs evaluate these deals using cash flow underwriting that may produce a different outcome. Approval is not guaranteed, but a bank decline is rarely the final word on a well-structured acquisition.

Who refers practice acquisition deals and how are they compensated?

Primary referral sources include healthcare attorneys, practice management consultants, CPA firms specializing in healthcare, dental and medical brokers, and advisors to newly licensed practitioners. Referral partners earn a fee — typically 0.5%–1% of the funded amount — when the deal closes. On a $750,000 dental practice acquisition at 0.75%, that is a $5,625 referral fee. Referral relationships are formalized through a signed agreement before deals are submitted.

Ready to refer a practice acquisition deal?

Review the referral agreement or submit a practice acquisition deal now

Practice acquisition deals require specific information about the practice type, acquisition structure, financials, and buyer background. Review the referral agreement first, then submit through the referral form with enough context for an initial evaluation. We respond within one business day.

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