Its very interesting to see stalls of Corporate chains in trade areas of Conferences, wherein they are seeking for collaborative partners.  As you are aware all the corporates are flush with funds and are approaching Ophthalmologists for partnership. This blog would analyze how we can collaborate rather that compete. What are the pros and cons of this model- and how do we create a good collaborative environment for Ophthalmologists to grow together.

How should you approach a Collaboration offer from a Corporate?

Lets start with types of Collaboration opportunities 

1) Collaboration with Other Ophthalmologists

a) Informal Collaboration- Where two or more Ophthalmologists work together - for example a Retina Surgeon visiting a Anterior Segment clinic and collecting his fees, In this arrangement there is no formal structure. - But this has been the most common way of Collaboration seen among Eye Doctors.

b) Formal Collaboration- Where two or more  Ophthalmologists join together invest together and practice together as a Group practice, there are various models of Group Practices available all over India 

2) Collaboration with Corporates

a) 100% Acquisition- Here the Corporate Acquires 100% of the Business of an Ophthalmologist or a Group of Ophthalmologists- My earlier blog on Mergers and Acquisitions will explain this in detail

b) Stake Sale-This is a new concept wherein the Eye Hospital Need not sell his full stake but a part of it- Let me explain this in Detail. 

Scenario -1- Established Practices

Lets take the Example of Dr John ( Fictional Name) practicing in a small town in Haryana. He has a good practice he sees around 100 Patients per day and does around 100 cataracts a month. He is now saturated and his children are not Ophthalmologists and he is afraid that since he is 55+ Years of age what will happen to his practice after him. He has two Options- sell 100 % to corporate and continue working for them, or sell 51% to the corporate now for a Valuation which is a multiple of his annual profits. ( Commonly called as EBIDTA) - Which option John should take depends on his requirement- he can either sell 100% at this point of time, or can sell 51% and grow with the company and sell the remaining 49% at a later date or when company goes for a IPO or is merged or sold to another entity. Depending on the risk potential Dr John can take either of the options.

Generally Corporates look at Practices which have a turnover of above 5 crore per annum for this model.

Scenario-2- Upcoming Practices

Dr Jane ( Fictional Name) 40 Yrs old - practicing in a Metro City - Has a growing practice of 40 Patients per day- and 40 surgeries per month- Dr Janes Turnover is not attractive for a corporate- and also Dr Jane feels that the practice is not improving and needs funds to expand or scale up. In this scenario Dr Jane has following options-

1)Join another one or two Ophthalmologist to the practice as partners whom may also invest and get in more patients - this option is not easy to achieve.

2)Get an External Investor who will take a stake in the company and then use the funding for growth.

3)Collaborate with a Corporate -wherein for the present practice a value is given to the Doctor and then Corporate invests in establishing a bigger center for the Doctor 


1) What is the value my practice will get?

The valuation varies from corporate to corporate and practice to practice- and generally its a multiple of EBIDTA- the valuation will be more if you are signing up for a longer duration and lesser if you are signing up for a lesser duration. Generally you can expect to get more than 8 Times your EBIDTA

2) Will I get all the money at one go?

Mostly no- you will get 50% or 60% on sign up- the remaining amount  is split for the year -2-3 -4 and so on.

3) Will there be a non compete?

Yes- a non compete after your tie up period is over - not to practice in a particular geography will be signed.

4) What percent should I Sell?

This depends on the buyer and seller- Some corporates only acquire 100%- some corporates acquire lesser- but most will like to acquire atleast 51%- if you feel there is growth Opportunity for the long term- you shall retain stake holding which u can sell in future for a larger valuation

5) When can I sell my remaining shares?

This also depends on the buyer and seller- generally you will be asked to give the ROFO- Right of first refusal to the corporate partner - the valuation will mostly be on the same EBIDTA multiple during which the first sale was executed but based on current EBIDTA. You can also retain your shares till the corporate goes for IPO to get a still larger valuation.

6) I am a small practitioner - but need funds for my growth- How can I proceed?

As mentioned above- you have option for Bank Loan, Join Other friends as stake holders for group practice and investment, Get an external Investor- or sell to a corporate - for a valuation  of the existing practice and the corporate shall establish a larger center where you shall be employed on a market salary plus incentive basis. For example if your turnover is 10 Lakhs a month now- and you make a profit of 4 lakhs- you get a valuation for this - and then also have opportunity to work with the corporate.

7) What are the risks in the model?

Definitely there is risk- 1) You may loose independence- and should be willing to work in a corporate system as per their guidelines 2) Apart from the first payment - the remaining installments will depend on the performance of your center and projected EBIDTA , if the EBIDTA reduces, in year 2 , 3 ,4 - then your pay out may reduce 3) Your future also depends on the future of the corporate- how they develop- and if they are able to raise more funding and go to an IPO.

8) How can Ophthall Help?

If your are considering collaboration, or being approached by a Corporate for partnership- Ophthall can guide you on the process and also negotiate on behalf of you to create win-win situation for both the parties.  You may contact me in my Mobile for further information on our Merger and Acquisition support service


Founder Ophthall Practice Development

Mob 9840324333