Very few business owners feel comfortable thinking about a time when they may have to hand over a great majority of control of their company. Succession planning is necessary during this kind of situation as many medical and dental practitioners that have a formal training and licensure are ones that can handle taking over a business. When developing a succession plan, this is to keep the practice running, providing health care to patients, and jobs to those who are passionate about your practice.
Succession planning is also to enabled the owner to convert his or her equity into cash for retirement. It is important to keep in mind that the structure of each succession plan will depend on the type of practice, whether it is a single or group practice, any buyout agreements with other partners, and determined compensation. For those solo practitioners out there, they will need to find a buyer or a merger partner to take over a business. Whatever the case may be, each succession plan gives the power back to the owner in order to manage the transition of his or her business to future owners or managers.
Succession planning for a group practice should begin by creating a buyout agreement for any physician that may decide to leave the practice in the future. This is a legal agreement between the owners of the business that determines how the future sale of an owner’s interest will be handled. This document is to identify the seller, the buyer, and the trigger events that would lead to a term of sale. Trigger events can include anything from death, retirement, disability, or voluntary withdrawal.
Succession planning for a solo practice requires the physician or dentist to find a buyer or recruited successor that will take their stake in the practice at a later time. Potential buyers can be younger physicians in the hope of eventually becoming a partner, and these physicians may at one point realize that the price of becoming a partner is too high. This can trigger them buying their own practice, and which they may find that the purchase price is lower than income greater than other options.
For those still interested in succession plans, we at Emerald Coast Consultants in Pensacola, FL, are the right people to help you getting ready for your future. Joshua Hartigan is the person that can walk you through each step, ensuring a safe and secure future for you and your family. Give us a call today to set up a consultation!