Simon Palmer, March 2012 - One of the more common conversations that we get into with practice buyers surrounds the potential role of the seller of the practice post-sale. Many sellers aren’t looking to retire right away and would just like to give up the burdens of ownership. Should they be offered to stay on in an employee or contractor capacity?

What are the potential advantages of having the seller of a practice stay on in a practice post sale.

1. Usually when any long standing dentist leaves a practice there is an element of patient attrition as the patients may have little loyalty to the practice anymore. If the seller is able to stay on (even in a reduced capacity), it shows some continuity in the patients’ eyes.
   Even if the seller is staying on in a limited capacity and many of the patients are handed over to the new dentist, there is something about having the old dentist around in the practice that makes it feel like they are going to the same practice they always went to. 
2. The seller can introduce the buyer more effectively to major referrers.
3. The seller can be a great source of information about the practice’s history and previous issues it had with the building, the patients, the staff etc.
4. If the seller wants to still work post sale, it is in the buyer’s interests that it is in their practice rather than somewhere else as there is a good chance that some of the seller’s loyal patients would follow the seller when they left.

What are the potential disadvantages of having the seller of a practice stay on in a practice post sale.

1. For many long-standing practice owners they have an emotional investment in their practice and how it is run. They may find it difficult to allow changes to be made that they disagree with.
2. For many long-standing practice owners it can be a difficult adjustment for them to become an employee and start taking direction from the new owner.
3. For many long-standing team members it may be a difficult adjustment for them to start seeing their old boss taking direction from someone. If there is a difference of opinion between the old owner and the new it is likely they will take the side of the old owner that they worked with for longer.
4. The old owner may find it difficult to hand over their patients when the time comes for them to leave.

It’s all in the setup...
While there are distinct potential disadvantages, if time is spent on the set-up of expectations, there is no reason why having the seller stay on cannot be a success for the buyer and the practice. It will depend upon:

1. There being enough work for both of you. The extent to which the seller should be asked to stay on has to ensure that the practice has enough patients to keep them both busy.
2. The seller needs to have an employment/ contractor agreement with the buyer that includes restriction of trade post-employment. Make sure that this is separate from the restriction of trade clause that is in the purchase/sale agreement. If the seller stays on and works for you for a few years, you want the restriction of trade to begin from when the dentist ceases work in your practice – not from when the sale took place.
3. The buyer and seller having a clear understanding of how their relationship and roles will work going forward.
4. If the selling dentist is planning on phasing-out or only working in the practice for a limited time, a plan should exist for the notice period necessary and the handover of patients.
5. The seller having an understanding regarding the boundaries of their new role. While their input will be valued and sought after, the final say on practice issues now lies with someone else.
6. The setup of clear expectations with team members.

While keeping the seller on will not work in every situation, where it does work, many practices have found huge benefits for all concerned, the buyer, the seller, the staff and the patients. Maybe it’s something that could work for your practice?