Thinking of investing in a startup outpatient anesthesia business... help?

[byrans]

This is a complicated question, because I'm not even sure what to ask or who to ask. Maybe that is a problem...

I am an anesthesiologist, and a colleague of mine has started an outpatient anesthesia business - essentially providing traveling anesthesia services to dental offices in town, with plans to expand to more offices and eventually other states. My friend is legit. Runs everything by the book (medically speaking) and is providing quality care. They started turning a profit recently after about 1 year of being in business.
The company is expanding and therefor requires more money and I have the opportunity to invest for stake in the company.

On one hand - I have nothing but confidence in the medical care being given.
On the other hand - I am a physician and have no idea how to evaluate the financial health of a company. My investment strategy thus far has been low cost index funds in the style of The WCI and bogleheads.

So - how do I evaluate the books on this company? Any advice? Thoughts?

I should say:
My financial life is in excellent order. Any money directed at this risky investment is money that I would be comfortable losing. This does not take away from my retirement savings, Roths, 529s, etc. I know there are more statistically intelligent things to do with extra money, but this is fun money. I'd rather do some fun/risky investing rather than take a fancy vacation.

[ACN]

An account would probably be a good first step to look at the books and determine the value of the company and financial health.

[Peds]

i think that's fine if you can afford to. lots of due diligence (ie dont trust yourself) like ACN said, treat it like that money could disappear, and you should be fine.

[VagabondMD]

I always wonder to myself why a friend running a successful, growing private business needs me, as an investor? I understand the need for additional cash for growth, but that can usually be obtained from a bank, without giving up equity. I probably miss out on such opportunities because I wonder too much.

[jfoxcpacfp]

Love the idea, glad someone is doing this for dental offices. I'm not a fan of dentists DIY-ing sedation dentistry.

Take heed to what Vagabond MD just posted. Doesn't mean there are not opportunities available, but that is a big question you need to answer. Of course, the reason could be that your friend's business is just growing too rapidly for one person to handle and s/he is more interested in having another expert with skin in the game to help make decisions and grow the business than the buy-in. iow, looking for a real partner rather than venture capital.

ACN is right, too. I cannot imagine considering this transaction without a good CPA and corporate attorney on your team to help you ask the right questions and advise you, especially if this is your first deal or first business.