Every Practice Acquisition Opportunity Requires Medical Working Capital
Purchasing a medical or dental practice isn’t just about acquiring patients and equipment. To make the transition smooth and successful, medical working capital comes into play—these are the funds needed to cover day-to-day operations after the deal is closed.
Financing for Medical Utilities, Supplies, Rent, Payroll
Working capital includes money for rent, utilities, payroll, medical supplies, marketing, and unexpected costs. Even if a practice is currently profitable, it can take months before incoming revenue covers operating expenses under the new ownership. Insurance reimbursement cycles, changing patient volumes, or delays in credentialing can affect cash flow. That’s why having sufficient working capital isn’t optional—it’s essential.
Lenders, including those offering SBA loans, understand this and often include working capital as part of the overall financing package. This provides new owners with the funds to maintain continuity in care and staffing while implementing their own business strategies.
Too often, buyers focus solely on the purchase price and overlook the liquidity they’ll need post-acquisition. Without adequate working capital, new owners may struggle with payroll, vendor relationships, or overhead, putting the practice—and their reputation—at risk.
Financial Review
To avoid these pitfalls, buyers should conduct a thorough financial review during due diligence. This includes forecasting expenses for at least 6–12 months and working with lenders like ProMed Financial to build in an appropriate cushion.
When properly planned, medical working capital not only supports survival in the early months but also enables investment in patient experience, technology upgrades, and growth initiatives that can rapidly increase the value of the acquisition.