I frequently get questions from docs who are looking to place an associate chiropractor wanted for buyout ad – and aren’t quite sure about some of the buyout details.
Interestingly enough, we get an almost equal number of questions from the other side of the fence – from DC’s who have responded to an associate chiropractor wanted ad – and are unclear whether the structure of the promised associateship will serve them well.
The primary problem here is that both sides are bringing some big assumptions to the table and, in the process, taking some unnecessary risks of being bound together in a bad deal. Certainly, there is risk involved in any employment relationship (regardless of whether you are the offering a chiropractic job or seeking one) just as there is risk in every sale (again, whether you are buying or selling). The key word here, though, is not “risk” – it’s unnecessary.
Before you place or respond to an associate chiropractor wanted for buyout ad, here are a few things that you may want to consider – and avoid.
You Have More Options Than You Realize!
One of the first mistakes I see many (younger and older) chiropractors make is that they believe that the Associate Buyout is the best way to transition into or out of practice. Over the years, practice owners have been sold the idea that the associate buyout is the only way to transition out of or into a practice to get maximum value for their business. And practice buyers seemingly have been told that the associate buyout is the only route that affords them the chance to buy.
In decades past, it may have been true that there was little to no financing available for chiropractic practice purchases, so the owner was forced to place an associate chiropractor wanted for buyout ad and hope for the best. Thankfully, financing IS available presently and specialty banks are more willing to lend for chiropractic practice acquisitions than ever before. So, it’s simply not true that the associate buyout is the only route to exit or enter chiropractic practice ownership.
In fact, the simplest route is the “traditional” sale whereby the owner sells to the buyer (who may or may not be the associate) and then leaves. Probably the most popular variation on that theme that works well for both sides is what we call the “Sell & Switch.” In this option, the owner sells the practice AND then turns around and works (usually in a reduced capacity) for the new buyer. This is a great scenario for the doc who wants to slow down (and not immediately exit) as well as for the buyer who wants to ensure a smooth transition (and minimize patient attrition), gain practice management skills and/or have the potential for increased income immediately after the sale (thanks to the combined production of two doctors).
There are other options for transitions as well, including Partnerships, Hybrid Partnerships and even Remote Management. My point is: the Associate Buyout definitely isn’t the only way.
Associate Chiropractor Wanted for Buyout: Details Needed!
What’s worse than the fact that many chiropractors assume the buyout is their only way is the fact that both sides usually have not been advised about all the details and best practices of that process.
As a result, both practice owners and potential practice buyers (who wish to start as associates) don’t have a firm grip on exactly what’s involved in bringing in a compatible associate on board; nor do they fully understand how to structure the stages leading up to the buyout.
While there is neither time nor space to outline everything that’s needed in this article, here are a few very important details to consider:
Practice Size: One of the first things to consider before placing (or responding to) a chiropractic associate wanted ad is the size of the practice, both in terms of patient base and physical space. Typically, the practice should have enough active patients that your practice easily sees in excess of 100 patients per week and generates at least 25 new patients each month. There are some practices where the owner has a high PVA and lower New Patient numbers that can still work. And there certainly are other practices where the patient volume is a bit lower, but the case or collections average is significantly higher than the typical practice that could work as well. But the point here is that the practice should have ample patients, size and resources to sustain two doctors.
In order to have space for an associate buyout to work well, there must be some creative thought given to scheduling, which may include the owner reducing their treatment schedule, extending office hours, and being open additional days. Unfortunately, many owners jump to this criteria first and talk about the potential of expanded hours. But if sufficient size isn’t present (as described above), increased “potential” won’t work, without the patients to help you realize that potential.
If it is determined that the practice fits the criteria regarding practice size and scheduling opportunities, then the next obstacle to be overcome is the money involved in going down this road. Since it will take some time for the associate to become self-supporting, is the owner should either have sufficient financial resources to pay the associate an adequate base salary and/or be agreeable to a decrease in their income (and schedule) to make things work. Unfortunately, if an owner chooses to decrease their income and shift his or her production over to the associate, there is the risk that the overall clinic services do not increase. So, my preference is usually the former – clinics with a healthy profit margin than can afford to pay an associate without the owner reducing their compensation.
When the Buyout is Working (More Details Needed)
Even if you can overcome the previously stated obstacles and the associate buyout can work, it is important for the seller and associate to agree on plans for the future buyout. In other words, more details will be needed!
Here, it is critical that the associate’s plan for the buyout is compatible with the owner’s plan and not the reverse. Too many owners get flattered by a young doc wanting to come work for them and they create their entire exit plan based on the timing and desires of the associate. Then, when the associate comes on board and discovers that working for the owner isn’t exactly what they had imagined, the associate leaves and the owner is forced to come up with a new plan.
What’s more frustrating is the doctor who constantly rearranges their plan. This could be the owner or the associate! In other words, they are a moving target whose dates keep changing, plans keep changing and they are impossible to pin down for a future sale.
Associate Chiropractor Wanted For Buyout IN WRITING Please!
Again, this is why it’s critical to be transparent and upfront about your intentions – and then put them in writing! While many docs fear committing to a person and a process they haven’t fully experienced yet, I can tell you (from experience) that the real reason to fear the associate buyout lies in what is NOT written in a contract or an agreement.
Sadly, our profession is littered with stories of unfulfilled promises to buy and to sell and associate arrangements that never amounted to anything. So before you put up the associate chiropractor wanted for buyout ad (or take a position answering one), learn from the mistakes of those who have gone before you and write your intentions down!
A good transitions consultant can walk you through the process of arranging a “honeymoon” period where either party can bail on the agreement without penalty and creating a structure for the buyout that makes sense to both sides. No one wants to feel that they are chained down to a bad contract and with proper counsel, you certainly should be able to avoid the risks of doing so.
Hopefully, this limited discussion will encourage you to thoroughly think through the process of the associate buyout, and will help you determine the best way to transition in or out of chiropractic practice.
Need to Find an Associate Job (That Can Lead to Ownership the RIGHT Way) or a Practice to Buy?
You’ll want to take advantage of our FREE Practice Match service, where we help you find an associate job, practice to buy or ownership opportunities that match your interests.
Also, if you want a deeper dive into making your next best move, check out our Buy, Build or Break Up FREE WEBINAR where we will discuss strategies for Purchasing a Practice, Starting One from Scratch or Getting a Better Chiropractic Associate Job!
Looking to Hire an Associate (for your transition out) or Sell Your Practice?
If you are looking to hire an associate as part of your exit strategy or considering options for your transition plans, you should check out our Sell, Switch or Slow Down webinar, where we’ll discuss strategies to help you maximize the value of your chiropractic practice sale or transition and minimize the risk of making costly mistakes.