BLOG: Associate physicians: Dance with the one(s) who brought you
Click Here to Manage Email Alerts
Key takeaways:
- Practice owners need to communicate with associate physicians before a sale transaction.
- Owners and associates should work collaboratively for the best outcome.
If you’re an owner of a practice that has decided to pursue a sale transaction, you have likely been working for months with your partners and advisers to explore the market, evaluate potential buyers and negotiate key deal terms.
But before you close the sale transaction (and, arguably, well before), you need to be thinking about your associate physicians. Presumably your associate physicians are key to the future success of the practice (especially if they are partner-track), and you (and the buyer) will want to make sure they stay with the practice for many years to come. If you’re an associate physician, you may have questions and perhaps even some hesitation about what the future might hold with a private equity partner. The best path forward for everyone may very well be to have an open and honest dialogue early in the process about the impact that the transaction may have on associate physicians. Owners will want to understand any concerns of associates, so that owners can work with associates (and potentially the buyer) to assuage those concerns.
Additionally, the buyer will want some assurances that associates will stay with the practice long term, and the buyer may require that all associates sign new employment agreements (possibly with new non-competes) as part of the transaction closing. It is not uncommon for associates to need some incentive to cooperate in the sale process. Fortunately, there are various ways for owners and associates to come to terms — perhaps the owners set aside some of their deal proceeds for the associates as a cash closing bonus (or retention bonus to be paid over several years of employment), or perhaps the owners can find ways to provide some equity in the new private equity platform to the associates. Owners could also adopt changes to the partnership process that are beneficial to the associates after the deal closes.
There are plenty of examples of practices that didn’t treat their associates well in the sale process, and associates have probably heard from their peers about them. But there are also plenty of examples of practices doing right by their associates and creating a true win-win for all involved. The best way to ensure that a sale transaction falls in the latter camp is for owners to start an open and honest dialogue with associates sooner rather than later and for owners to work with associates collaboratively and not in an adversarial manner.
Collapse
Read more about
Click Here to Manage Email Alerts