FIX THIS PRACTICE
FIX THIS PRACTICE
The Senior Partner Who Won’t Let Go
What can you do when a senior doctor
is slow to commit to an exit strategy?
RICHARD S. KATTOUF, O.D. , D.O.S.
Q I am in a 50/50 partnership of a large independent practice. My partner is in his mid-60s, and I am in my late 40s. The senior partner keeps vacillating about his exit strategy. Six months ago, we hired an associate optometrist who has aspirations to buy-in. The associate continually asks me when we can commence an agreement. So far, the senior partner has procrastinated in this decision-making. What steps should we take?
Dr. E.P. Moses via e-mail
A: The senior partner could be suffering from potential separation anxiety. A total of 40 years of developing this successful practice creates deep emotions. Coming to terms with selling can be traumatic to many owners. It is critically important for you and the associate optometrist to understand the roller coaster of feelings the senior doctor may be experiencing.
Another factor is that you and the senior doctor have a professional marriage — that is, you have built a long-standing relationship. Many times friction can occur if the senior doctor perceives you want to define his exit strategy (E.S.). He could also think you have a personal or financial agenda.
To minimize these feelings, the practice (not a single doctor) can retain a consultant who has experience and expertise in practice sales agreements and E.S. This third-party professional’s obligation is to offer several options and negotiations in an effort to finalize a fair and equitable agreement. Consider the following alternatives and facts:
► The practice has an “in-house” buyer. If the associate purchases a portion of the practice, you save brokerage fees. These costs can range from 8% to 10% of the sale price.
► Try very hard not to lose this potential in-house buyer. Because optometric practices are in a “buyer’s market,” it takes months or years to find a viable outside buyer. We assume here that his/her personality, clinical skills and chemistry fit your organization.
► The senior must understand that an E.S. can take place through several years. It does not mean he leaves the practice immediately. This timing is part of the transaction that the consultant may negotiate. This third-party is the conduit between the three parties. He must keep everything non-emotional and professional.
► The senior could sell his 50% to you. As the new owner, you could sell whatever percentage you wish to the associate. This arrangement guarantees that you control the practice.
► The new O.D. could purchase the senior’s 50%. I do not recommend this, but it is an option.
► The senior could sell 25% to the new O.D. now and the remainder in a defined time frame.
► The senior can act as “banker” and earn interest on the sale.
► In negotiations the senior would specify the number of days he prefers to work. The other owners must approve this arrangement.
► You must define whether the senior will receive benefits through the practice.
► You must establish a rental agreement if you and your partner own the building.
As a consultant to optometry for many years, I have witnessed some real “train wrecks” due to a lack of a proper E.S. If it is done properly, everyone wins. Put it off and you are exposing yourself to unneed-ed professional, tax and financial pitfalls. OM
DR. KATTOUF IS PRESIDENT AND FOUNDER OF TWO MANAGEMENT AND CONSULTING COMPANIES. FOR INFORMATION, CALL (800) 745-EYES, OR E-MAIL HIM AT ADVANCEDEYECARE@HOTMAIL.COM. THE INFORMATION IN THIS COLUMN IS BASED ON ACTUAL CONSULTING FILES.
Optometric Management, Volume: 47 , Issue: November 2012, page(s): 22