Every small business owner knows that at some point they will want to divest their business interests and enjoy the fruits of their labor. Determining when to start the process of transitioning your practice is key. If you are considering a fractional buy-in with a valued associate doctor, several factors are vital to a successful transition.
Motivation: Most practice owners begin to think about an associate with ownership interest when either they, personally, or the business is at a crossroads. There may be a desire to add new services, to realize practice growth within their primary office, or there may be the opportunity to expand with a neighboring satellite practice. Some practitioners consider a fractional buy-in when faced with a full schedule that can’t be managed alone or when increasing demands of ownership responsibilities become too great. Other doctors simply have a desire to cut back on production and realize a return on capital.
Evaluation: When evaluating an associate for a fractional buy-in, consider what your associate has brought to the practice that would warrant a long-term ownership relationship. Perhaps, they have added a valued specialty service, created/updated standard of care protocols and trained staff, or added production to off-set patient demand, resulting in a more efficient schedule. Your associate may have brought a higher level of lens expertise, dispensary management or improved coding and billing to the practice. It may have been their understanding of business finances and key performance business metrics, or desire to build the practice through community involvement. Whatever the value-added process, policy or procedure, your choice in joint practice ownership is an important and far-reaching decision that will impact your business success and service to your community for years to come.
Preparation: So, how do I get started with the plans of joint ownership? There are so many aspects to consider. The unique structure of your strategic transition plan can be found in the answers to your questions. What percent of ownership do I offer my associate? What can my associate afford and still have enough cash flow to support a family? How do we determine a purchase price? How do we structure the purchase and the purchase agreements? Where do we go for financing? What are the steps to transition and how long does it take? How do we structure our compensation after the sale? What operating agreements do we need once we are joint owners? These and other questions must be addressed throughout the transition process and when properly addressed provide a road map that is clear, insightful and effective.
You’ve spent your professional career growing and managing a successful practice. Your fractional buy-in strategy is unique and must be carefully considered and strategically planned. For over three decades, Williams Group has been committed to offering professional services in a knowledgeable, ethical, and timely fashion to help you reduce the stress of ownership transfer. Our transitions team has extensive industry experience in all facets of the buying and selling process. From valuations to strategic buy/sell consulting to estate planning, Williams Group is the optometrist-recommended choice to navigate the next phase of practice ownership. Learn more about the programs we offer.
Tammi Sufficool
Vice President of Practice Transitions
Williams Group
Email Tammi