Selling But Staying in Your Practice

If you’re considering selling your practice to a private equity firm while remaining employed by them, this article clarifies the main points to consider.

By Catherine Maley, MBA

Negotiating the deal, this is where specific terms and conditions are established, so you need your own experienced legal and financial advisors who specialize in healthcare mergers and acquisitions to guide you.

While the promise of financial stability, reduced administrative burdens, and assurance of good, ongoing care for your patients sounds good, the process involves significant considerations and planning.

For example: Private equity firms seek stable, profitable investments, so plastic surgery practices with med spas fit this model due to their consistent demand and reliable revenues for both cosmetic surgical and non-surgical procedures.

That’s vital for the private equity firms because their goal is to grow the predictable revenues by consolidating practices to achieve economies of scale, improve operational efficiencies, and enhance profitability.

SELECTING THE RIGHT PARTNER

However, choosing the right private equity partner is crucial. You must thoroughly vet potential buyers, by assessing the firm’s track record, understanding their business model, and ensuring their values align with your own. Surgeons should look for partners who prioritize patient care, maintain staff employment, and offer fair financial terms.

NEGOTIATING THE DEAL

This is where specific terms and conditions are established, so you need your own experienced legal and financial advisors who specialize in healthcare mergers and acquisitions to guide you.

KEY ASPECTS TO NEGOTIATE INCLUDE

Financial Terms: Ensure you receive a fair price for your practice. This involves an upfront payment and usually potential stock options for future pay off.

Employment Terms: Define your role postsale, including your salary, responsibilities, and duration of employment.

Operational Control: Define the level of control you retain over clinical decisions and daily operations. This can affect your ability to maintain the quality of care and practice culture when you are no longer “the boss”.

Exit Strategy: Clarify terms for eventual retirement or departure from the practice, including any non-compete clauses and post-employment restrictions.

TRANSITIONING AND CHALLENGES

Effective communication with staff and patients is essential. Assure staff they will be taken care of and patients will continue to receive quality care, even though changes will happen such as centralized billing, and standardized procedures to streamline operations.

However, it can be a big challenge to adapt to new management structures and losing control over staffing decisions and day-to-day practice operations. You have to be ok with someone else calling the shots.

LONG-TERM CONSIDERATIONS

For many surgeons, selling their practice is not just about immediate financial gain but ensuring long-term success and stability since they want to stay active and enjoy what they do without running the business of what they do.

Consider the goals of the partnership and the firm’s commitment to growing your practice and for how long. Staying involved in the practice post-sale allows you to ensure that patient care standards remain high and that the practice continues to thrive for as long as you want to continue doing surgery.

CONCLUSION

Selling your plastic surgery practice to private equity while remaining employed within it, offers numerous benefits, including financial security and operational support. However, it requires careful planning, thorough vetting of potential partners, and clear negotiation of terms.

That way, you navigate this complex process effectively, while ensuring a successful transition that benefits your practice, staff, patients, and you!