Buy vs. Build

A Financial Comparison

The following illustrates the financial differences between buying a practice and building a practice using assumptions based on real-world client case studies:

Buying assumptions

  • Practice grosses $350,000
  • 50% profit
  • 5% annual growth
  • 100% financed
  • Buyer provides the working capital

Building assumptions

  • Base of $100,000
  • 20% annual growth; reduced to 5% annual growth when $350,000 gross is reached (same as buying example).
  • 65% profit is achieved until year 5, then reduces to 50% profit (same as purchase example)
  • Spending is consistent with additional marketing costs of $25,000 annually
Buy Scenario 10 yearsBuild Scenario10 years
Gross $ 4,402,262 Gross $ 2,421,188
Expenses $ 2,515,579 Expenses $ 1,130,074
Net Profit $ 1,886,684 Net Profit $ 1,291,114
Debt Service $ 594,750 Additional Marketing exp $ 250,000
Net Available for Buyer $1,291,934 Net Available for Buyer $1,041,114
Buying vs. Building $ 250,820