Retirement or Should You Sell and Stay?
Earlier blogs mentioned there are three ways to exit the practice: 1) sell and leave, 2) sell and stay, and 3) partial sale. Today we’ll discuss Sell and Stay.
Why Sell and Keep Working
There are several reasons why it might make sense for the owner to sell the practice but continue to work there:
- In a partnership, the owner wants to sell his share to the remaining partner, but remain working on a full or part-time basis.
- The owner is tired of managing the business, and wants to devote full time to patient care.
- The new owner is an outside group that needs the OD as an employee.
- The new owner is an OD but doesn’t have the time available to provide patient care.
Paid a “Fair Market” Salary
With any of these scenarios, it is important for the seller to remember that once he sells the business, he is a “hired hand”, and is now paid at fair market salary. That salary, obviously, is negotiable, and a key element to making the deal work.
Companies that Purchase Practices
Lately there are some groups that are designed to help ODs with an exit strategy. American Optical Services (AOS) will purchase practices and hire the OD as an employee. The company centralizes billing and administration of the practice, and requires that the doctor remain for five years.
The ownership change is not visible to the patients – the name and personnel remain the same. My Eye Dr. is another company that is actively purchasing optometric practices and hires the owner as an employee. The newly acquired practice changes its name, and now becomes a part of the chain.
Under the right conditions, these transactions can benefit both parties. The private OD has an instant exit strategy – he works for 5 more years at his practice and can walk away, or re-negotiate continued employment. With their business skills and experience, the new management team can often improve performance and profitability of the practices they purchase.
All of these scenarios involve the owner selling 100% of his business. Do you want to have your cake and eat it too? Perhaps you need a partner!
Next, we’ll discuss a partial sale – bringing in a partner.