The Question We Get Asked on Every Deal
When successful practice owners come to us saying, “I want to sell my practice,” they tend to have two priorities – making money and taking care of their staff.
Doctors worry about everything from telling their staff to wondering if their long-time employees will be compensated well.
In this article, we’ll cover
- Should I tell my staff?
- A buyer’s perspective
- Leading the conversation before close
- Staff compensation post-sale
- Worst case scenarios
Should I Tell My Staff?
No, do not tell your staff, “I want to sell my practice.”
Talk of selling without a careful and confident plan can incite nervousness and impact the office’s day-to-day operations…
…Especially at the front end, when neither you nor your staff fully understands the process because the deal terms haven’t been negotiated yet.
Even though deals almost always end with better benefits for them…
Staff can quit, scared they’ll be displaced (They won’t be).
Staff can quit, nervous you’re going to leave (You won’t).
Staff can spread rumblings around the office with genuine concerns that negatively impact an otherwise positive culture.
The best way to take care of your staff is to be a present, prepared seller and work with a broker who will take care of them during negotiations.
A Buyer’s Perspective
Buyers purchase a practice based on valuation. This valuation takes into consideration the overall health of the practice – due in large part to a strong company culture and good staffing.
It is unlikely for a buyer to purchase a practice and then overhaul its operations on day one. They are actually disincentivized to come in and make staff unhappy by, for example, cutting their salaries.
Instead, new owners are highly motivated to keep the existing staff in place and satisfied for the ease of post-close transitions.
Further, successful companies buy successful practices. Whether your buyer is a private equity company or a small DSO, they likely have more resources than you to expand benefits, introduce new pathways for bonuses, increased comp, and more.
Leading the Conversation
You will have to talk to your staff at some point, usually a few days to a few weeks before close.
The key is to have positive and honest conversations with your staff. Considering highlighting
- Their pay will remain the same (or go up).
- Their hours will remain the same.
- Their benefits may be more comprehensive.
- Daily systems will most likely undergo a transition period, but the end result should be more streamlined and less stressful.
- Emphasize the alignment between your current vision and the new owner’s vision. Our work is not just selling practices, it’s pairing sellers with the right buyer. Share why you chose the buyer you did.
Read more about the pay and benefits changes below.
Staff Compensation Post Sale
During a conversation about the sale, don’t hesitate to let your staff know how your broker negotiated on their behalf.
They’ll likely be most concerned with salary and benefits, and there’s good news to share!
- New Benefits – Oftentimes, buyers are able to offer benefits that you haven’t been able to offer. There will likely be an improvement to their current benefits package.
- Sustaining salary – Reassure the existing staff that part of the deal included advocating for pay scales to remain the same. Share increases, new compensation pathways, and anything other bonuses your broker negotiated into the deal.
Worst Case Scenarios
Staff Leaving
After communicating openly with your staff when the time is right, you may detect that staff are wanting to leave.
Addressing their issues in a confidential, one-on-one environment. Make the message about restating their sustained salary and increased benefits.
Over Market Comp
We represent clients who have long-time staff members, sometimes family. We have seen doctors pay 20-40% over the market rate to retain their employees. It not only helps them to build practice culture, but it also helps them avoid attrition, rehiring, and training.
If this describes your approach, you may be concerned that overpaid staff may face cuts. However, in our experience, most buyers eventually learn to live by paying higher wages to maintain the deal.
On the other hand, if the staff is not acting as productive support that justifies the over-market wages, talk with your broker about possibly adjusting staff to prepare for the sale.
As we mentioned above, be honest with your staff. Do not tell them they will get paid higher, only to leave the DSO to fire them because you did not make adjustments.
Summary
Most of all, seek experienced brokers who understand your practice and are aligned with your vision. They will be able to market your practice and bring in buyers that treat you and your staff with respect. Starting with a broker who understands the importance of staff will lead to successful professional practice transitions.
