Question:
Hi Jennifer,
I have an associate I would like to buy in to my practice as my exit strategy. We have had some preliminary conversations, but I'm not sure what next steps would be.
Any advice?
Thanks,
Dr. K
Answer:
Sounds like the conversation has started, but is not organized or serious yet. As a first order of business, before conversations can really commence with the associate, it is imperative that the books and records of the practice be in presentable fashion. The first questions your associate's advisors (attorney and accountant) will have is for access to the books and records to see whether or not the practice is profitable, whether or not the buying price you may be looking for is substantiated, and the general status of revenue, profit, and debt on the practice.
Assuming the books are in order, my best advice is to be completely transparent about your expectations regarding payment for a partnership interest and also control following the purchase. Of course the previous directive is preconditioned on you having decided on a stated preference (which, oftentimes, proves difficult with the selling partner having mixed feelings on transitioning from control...). If you intend to continue practicing as usual, be sure to convey that directly to the associate. If you are looking forward to taking a step back, it is very important you outline to the associate what functionality you expect the associate to take on in their partnership role. Managing expectations is often be the hardest part of any sale process, and especially when that process is involving a junior associate. Of course, every situation is somewhat different. So the best advice we would have to have a conversation on your particular circumstances. For our purposes today, making sure the books are presentable is definitely your first step.
