Little need for “hand holding” after the purchase of a practice

Article Outline

• An arrangement that works for everyone

Very often, after the purchase of an optometry practice, circumstances call for the senior doctor to receive a salary while remaining in the practice for a period of time—often as long as a year—to help the buyer, or junior doctor, during the transition. The senior doctor's tasks usually call for introducing the junior doctor to patients, helping in the administrative process and, in general, teaching the new practitioner the ropes of the business.

This is all well and good, yet in truth this is a luxury that often can be avoided, saving the buyer from the need to pay the seller what is often a somewhat significant salary. This becomes especially meaningful in light of the fact that the buyer is likely to have just amassed a rather large debt in purchasing the practice and will want to jettison as much in the way of costs as possible. In addition to the financial aspect, the junior doctor might also find that having the senior doctor around can actually impede the development of the practice by fostering a continued dependence on the senior doctor. All too often, it becomes a situation in which the young doctor begins to actually count the days until the older doctor leaves (in terms of both the financial and emotional obligation).

New practitioners enter the working world well trained in the practice of optometry. It is not a case of someone entering a business with no knowledge or experience in the field. So why does the seller really need to be holding the buyer's hand during the transition? Is it a case of maintaining “business as usual” or is it really necessary?

For starters, take a closer look at the ostensible reasons why this is done. On the top of the list is the so-called need for the senior doctor to “introduce” the junior doctor to patients. How important is that? Certainly it makes it easier, yet very often the younger doctor has been spending time in the practice before the sale and will have worked with many of the patients. The seller would have also sent notification to all patients informing them of the transition and introducing the new practitioner. In addition, the new doctor, just as any new business owner, should be prepared to kick off a marketing campaign that would require little input from the older doctor. New practitioners generally will have a vision of the kind of practice they want and will be communicating what that is and will be, not what it was. Just like having a parent walk a child into a new school, it might be nice to have the security of having a hand to hold, but when the clock is ticking and checks are being written, it is certainly not a necessity.

Because the buyer should have the clinical skills needed to run the practice (capable of treating patients and knowledgeable of the equipment), having the older doctor around offers little in the way of tangible benefits. With regard to administrative tasks, in many cases, they would be the responsibility of the office manager. Even if this individual should leave the practice, the learning curve is not terribly steep. This all points to why there is no reason to have the senior doctor around for any length of time to help in the transition.

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An arrangement that works for everyone 

Not retaining the services of the seller is not meant as a way to shortchange the seller or to callously put the senior doctor out to pasture. Rather, it is something that can and should be spelled out in the original buy/sell agreement and can be negotiated to benefit both sides. For example, instead of paying, say $400,000 for a practice and a $750-a-week management contract for a year, both sides could come to a happy medium that might include a higher sale price, say $430,000 and a nonexistent or very short transitional period. This way the senior doctor may lose out on the incremental management portion of the contract, but would benefit from the opportunity to receive more money up front that can be invested in lieu of the weekly paycheck.

Doing some things the old-fashioned way can be effective. Yet, when it comes to buying a practice, keeping the seller on for a significant length of time simply because it has always been done that way may very well not be in the best interest of the buyer.