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Associate Buy-ins
Whether you’re the owner or the associate, these transactions can represent a winning solution for both parties. Many owners choose to exit their practices in stages, i.e., they sell a small piece of ownership to a valued associate or group of associates several years before they actually plan to leave. Such a strategy allows younger doctors to enter ownership sooner and to develop practice management skills alongside the current owner. In most cases the process has two steps: first, the sale of a partial interest in the practice to the associate, followed a few years later by the purchase of the remainder when the original owner actually exits. This approach can lead to a smooth and successful transition for the owners, the clients and the staff.
But there are traps. How large an interest should be sold initially? How do you set a price that is fair to both buyer and seller and represents what is actually being sold, i.e., a non-controlling ownership interest? Should an associate get a price break for past services? Can an associate get outside financing to buy a piece of a practice? What are the income tax consequences for buyer and seller?
These issues (and more) are discussed in Lorraine's workbook, Structuring An Associate Buy-in, available through AAHA Press. In addition, we work with both buyers and sellers to structure buy-ins which meet their specific needs.
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