Quick answer
Due diligence on a health or care business checks that the income you're paying for will still be there after settlement. Review several years of financials, confirm which practitioners and staff are staying, check the lease and landlord consent, inspect equipment and search the PPSR, confirm licences and approvals, and review the tax position, including payroll tax. Lenders will ask about the same things.
Key points
- The main question: will the income still be there after settlement?
- People risk (practitioners and key staff leaving) is usually the biggest risk
- Check the lease early; no landlord consent can stop a sale
- Search the Personal Property Securities Register for anything over the equipment
- Review tax exposure, including payroll tax on contractor arrangements
When you buy a health or care business, you’re not really buying rooms and equipment. You’re buying the likelihood that patients, clients or families will keep coming, that the people who serve them will keep turning up, and that the income will keep flowing after your name goes on the door. Due diligence is how you test that likelihood before you pay for it.
This checklist is organised around the questions a careful buyer, and a careful lender, will ask. It applies to GP clinics, dental and vet practices, allied health clinics, pharmacies and childcare centres, with notes where they differ. Use it alongside advice from an accountant and lawyer who work with practice sales.
Why does due diligence matter so much in health businesses?
Because so much of the value is goodwill, and goodwill is fragile. business.gov.au notes that there’s no single method for valuing a business, and that approaches range from comparing similar businesses to looking at return on investment, asset values, replacement cost and future earnings. In a practice, most of those methods lean on future earnings, and future earnings depend on people.
A lender asks the same question you should: if I fund this purchase, will the income that repays it still be there? Everything below feeds into that answer.
1. Financial performance
What to request:
- three to five years of financial statements and tax returns, as business.gov.au suggests
- BAS for the same period
- monthly management accounts for the current year
- revenue broken down by practitioner, service type and payer
- bank statements to reconcile against reported revenue
What to look for:
- Trend, not just level. Is revenue growing, flat or quietly declining?
- Owner adjustments. Is the vendor paying themselves below market? Running personal costs through the business? Your accountant should normalise earnings.
- Payer mix. For GP clinics: Medicare, private fees and incentives. For allied health: private, health funds, NDIS, insurers. For childcare: subsidy and gap fees. For pharmacy: PBS and front-of-shop.
- One-offs. Grants, catch-up payments or unusual months that won’t repeat.
2. People
This is usually the biggest risk.
- Practitioners. Who produces the revenue? What share depends on the vendor? Who’s staying, on what terms, and for how long?
- Agreements. Are contractor or employment agreements written, current and consistent with how people actually work?
- Key staff. Practice managers, head nurses, centre directors and senior dispensary staff hold relationships and knowledge.
- Entitlements. Leave balances and other entitlements that transfer with staff.
- Culture. Talk to the team if the vendor agrees. A change of owner can unsettle people.
Protective steps include a handover period, part of the price deferred against retained revenue, and restraints on the vendor. Our page on buying a medical practice looks at these in more detail.
If you’re partway through a deal and want to know what finance is realistic, you can check in about a minute without a credit check.
3. Premises and lease
business.gov.au recommends reviewing lease terms and getting the landlord’s consent to transfer the lease to you, or negotiating new terms.
- remaining term and options
- rent, reviews and outgoings
- landlord consent to assignment, and any conditions
- make-good obligations at the end of the lease
- permitted use, which matters for clinical and childcare premises
- whether the space suits your plans for growth
A clinic or centre is hard to move. A short remaining term, or a landlord who won’t consent, can stop a sale outright.
4. Equipment and fit-out
- Inspect the condition, age and service history of clinical equipment.
- Search the PPSR. business.gov.au recommends checking the Personal Property Securities Register for anything registered over assets you’re buying.
- Check what’s leased. Leased equipment may not be included, or may need the lessor’s consent.
- Estimate upcoming replacements. An ageing chair, autoclave or imaging unit is a cost you’ll face soon after settlement.
- Confirm licensing for any equipment that requires it, such as some imaging.
5. Licences, approvals and compliance
business.gov.au says to confirm the business holds the licences and permits it needs and that they’re current. For health and care businesses, this includes:
| Business | Examples to confirm |
|---|---|
| GP and specialist clinics | Accreditation status, practitioner registrations, arrangements for provider numbers at the location |
| Dental | Practitioner registrations, radiation licences where relevant, infection control |
| Allied health | Practitioner registrations, any scheme or insurer approvals |
| Vet | Premises and practitioner registrations under state rules |
| Pharmacy | How the new owner will hold approval to supply PBS medicines at the premises |
| Childcare | Service approval and what a new approved provider needs; quality rating history |
| NDIS and aged care | Registration status and audit history |
Approvals often don’t transfer automatically. Work out early what the new owner needs to apply for, and how long it takes.
6. Tax and liabilities
- BAS, PAYG withholding and income tax. Are lodgements and payments up to date?
- Superannuation. Any arrears? Note that the ATO says Payday Super applies from 1 July 2026, so check how super is being paid now.
- Payroll tax. Particularly for medical centres engaging contractor GPs. Revenue NSW, for example, describes relief for past periods and a rebate from 4 September 2024 where bulk billing thresholds are met. Understand the vendor’s position and any assessments. Our payroll tax guide explains more.
- Structure. Are you buying assets or shares in an entity? Buying shares can bring the entity’s history, including tax, with it.
7. Patients, clients and reputation
- active patient or client numbers over time
- new patient trends and referral sources
- recall systems (dental, optometry, allied health)
- waitlists and enrolments (childcare)
- online reviews and complaints history
- how patients will be told about the change of ownership
Illustrative example
Illustrative only. A physiotherapist is buying a two-location allied health clinic. The financials look strong, but the breakdown shows one senior physio, who isn’t the vendor, produces a large share of the second location’s revenue. Due diligence also finds the second location’s lease has only a short term left, with no option. The buyer negotiates a new lease with the landlord before exchange, agrees a retention arrangement with the senior physio, and defers part of the price against that location’s revenue in the first year. The lender takes comfort from all three.
Who should be on your due diligence team?
Buying a practice is not a solo job. Most buyers need:
- An accountant who works with health businesses, to review and normalise the numbers and advise on structure and tax.
- A lawyer to review the sale contract, lease, employment and practitioner agreements, and to draft restraints.
- A valuer or broker where the price needs testing against the market.
- An equipment technician for high-value clinical equipment.
- A finance specialist who can tell you early what the purchase will support.
Bringing them in early costs less than discovering a problem after exchange. It also gives you a clear list of conditions to negotiate with the vendor.
Getting the purchase over the line
Due diligence takes effort, and it often uncovers things that change the deal: the price, the structure or the terms. That’s the point. The buyers who come through it best are the ones who find the problems before settlement rather than after.
When you’ve done the work and the numbers stack up, the right finance helps you move quickly. For more on structure, see practice buy-in loans, buying a childcare centre or pharmacy business loans.
Asking what’s possible takes about 60 seconds, and there’s no credit check when you first enquire. We don’t send your details round a network of lenders, so you can keep your attention on the deal. A real person who understands practice purchases will review your enquiry and call you. Please be accurate on the form (purchase price, business type, your state and any property you could offer) so we can point you to the right structure first time.
Frequently asked questions
How many years of financial records should I review?
business.gov.au suggests verifying three to five years of financial documentation, including tax returns, profit and loss statements and cash flow records. For a practice, add billing or collections reports by practitioner.
What is the PPSR and why does it matter?
The Personal Property Securities Register records security interests over personal property such as equipment. business.gov.au recommends searching it when buying a business, because equipment you're paying for may be subject to someone else's security interest.
How do I protect myself if key practitioners leave after I buy?
Common approaches include a handover period with the vendor, deferring part of the price against retained revenue, confirming key practitioners' intentions where appropriate, and restraint clauses drafted by a lawyer.
Should I get my own accountant to review the numbers?
Yes. The vendor's accountant prepared the figures for the vendor. Your own accountant can normalise earnings, test assumptions and spot issues such as unpaid tax or unusual owner arrangements.
Can I get finance before due diligence is finished?
You can find out what's realistic early, which helps you negotiate. Formal approval usually needs the due diligence documents, so the two often run in parallel.
Does enquiring about finance involve a credit check?
No. There's no credit check when you first enquire. It only comes up if you decide to proceed.