The roadmap to any dental practice transition can take many forms. In the case of an associate-to-buy-in strategy, a potential buyer is courted from a group of associates to buy-in over a period of time to ensure compatibility and allow time to figure out the future of the practice rather than deciding from the outset. Here’s how to get the ball rolling.
Get it in writing
If ownership is your goal when starting as an associate within a practice, a written plan or roadmap should be in place from the start of employment to limit the amount of gray area. By having everything outlined and in writing prior to the date of purchase, the process will be seamless and effortless when the time comes to officially buy-in. Likewise, the current owner should also have a written plan to limit their liability and chance that the associate leaves because their expectations are not being met.
Take your time
While this transition is the longest approach, lasting at least five years, it is the most flexible as long as division of power is taken into consideration. This allows time for all parties to figure out their compatibility and working relationships, as well as for both the seller and the potential buyer as all the contracts are agreed upon at the start as is the timeframe for the transition. Many times, the contracts can be signed before as well so that the deal is “essentially done” even though it may be a year or more before the transaction actually consummates.
Plan your timeline
Part of your outline should include when and how the buy-in will occur. With a roadmap, there can be a certain amount of years the doctor will be an associate before buying in or it can depend on predetermined growth benchmarks. Either way, exit strategies should also be included so that all doctors are able to exit gracefully and with little financial impact.
Know your worth
Completing a practice valuation from the start will only provide a better understanding of the amount of growth the associate is responsible for to ensure the associate is not paying for their contribution to the increased value of the practice. A second valuation is often then conducted on the day of the transition, and the two valuations are averaged so that the associate does not “double pay” for the work they have done and the seller is compensated for the risk of having a high priced employee on board.