Associate buy-ins: No tricks, just treats
Christopher J. Allen, DVM, JD
Christopher J. Allen, DVM, JD is president of the Associates in Veterinary Law P.C., which provides legal and consulting services exclusively to veterinarians. He can be reached via e-mail at firstname.lastname@example.org. Dr. Allen serves on dvm360 magazine's Editorial Advisory Board.
In order to find out whether or not there's chemistry between a veterinary practice owner and a newly-hired associate, you need to walk a fine line.
(Getty Images)Seasoned, experienced associates who've been in practice for a few years tend to go into job interviews with a different set of goals. They may have a more attentive eye to the future, the practice environment they really want and, ultimately, a picture of where they hope to retire. As an old practitioner I used to know always said, "They've been beaten up a few times."
So for those doctors-and their potential employers-I pose this question: Why beat around the bush when talk rolls around to a buy-in or partnership? The job seeker isn't a kid anymore and presumably there's a reason why a practice would be seeking an experienced associate instead of a recently minted practitioner.
I don't see why either party should be shy about broaching partnership or ownership, and I'd recommend getting specific.
If a buy-in is on the minds of both owner and associate, the best time to start discussing theoretical price, time frame, percentages and so on may be very early on. That way there's less chance that either the clinic or the associate will end up wasting years developing a relationship that's doomed to fail.
Careers have their own biological clock
In certain respects, the first year of the relationship between a practice owner and an experienced associate is much like dating. Both sides look superficially attractive to the other but there's no way, except for the passage of time together, to know whether there's genuine chemistry to support a long-term relationship.
On the other hand, life and career are finite. And there's genuine value for the owner and associate to share long-term goals and plans. In relationships, if a two people in their thirties discuss children on their first date-one desperately wants a family and the other "just can't stand kids"-there probably isn't much point to a second date.
Similarly, during a first or second interview or an on-site practice visit, the associate should share her genuine long-term plans. If her top priority is freedom to travel and ownership has never been a goal, she should state this fact immediately and unequivocally. So if the owner is really looking for an associate-slash-exit-strategy, he can move onto the next applicant. There's no point to dangling the possibility of a practice purchase in front of a ready-to-retire clinic owner if all you really want is a job.
No promises ... yet
Naturally, it doesn't make sense to imply or guarantee an associate who's worked at the practice for less than a yearis going to be offered a buy-in or buy-out. I've hired numerous associates who showed a much different personality than the one I met at the initial interview. Discovering and developing workplace chemistry takes time. But if an associate looks good, sounds good and appears to be genuine partner or buyer material, what's wrong with the practice owner sharing the theoretical framework of his own career trajectory?
For practice owners, the secret is to walk the line carefully between playing your buy-in candidate hunt close to the chest and leading on the associate. Consider this approach:
> Explain clearly and in general terms that you plan to take on a partner or a buyer within the foreseeable future.
> Simultaneously, explain the associate position could develop into and equity position for the associate, but this isn't guaranteed.
> Consider constructing the employment contract to mention the potential of partnership or buy-out.
> Frame any and all potential partnership/ownership language in the contract as not constituting an offer, only information.
> Also consider providing in the employment agreement some basic details of how the owner would anticipate seeing through such an offer. This could include:
• the general time frame the you're considering
• the amount of ownership or percentage of stock the owner would initially be willing to part with
• how much, if any, the owner would be willing to owner-finance
• a broad range of how much the associate might expect to have to spend for the percentage that would potentiallybe transferred (80 to 100 percent of a year's gross, five times profit, an average of two professional appraisals, something solid that the job seeker can wrap his head around)
• whether other associates already in the practice might already have been promised buy-ins, if full ownership isn't available.
But there is one huge caveat: Remember that the person on the other side of any bargaining table-or exam table for that matter-tends to hear what he wants to hear. How often have you quoted a surgery price as about $600 to $1,000, only to have the client go ballistic when the final cost is $650 ("You told me it would be $600!")? The same phenomenon occurs when a practice owner implies that he's considering eventually selling some of his hospital to an associate "if everything works out OK and we have the same practice philosophy."
What the associate hears is, "Next year we're going to start talking numbers, and I'll be going to the bank to get financing for a 50 percent share of this place."
So don't let this sort of conversation become what TV's Smothers Brothers used to call "misconscrewed." If you fail to be clear that any discussion of partnership is "extremely preliminary," you can cause a later storm of resentment. Think NBC's Tonight Show with David Letterman and Jay Leno and proceed with caution and clarity.
Christopher J. Allen, DVM, JD, is president of the Associates in Veterinary Law PC, which provides legal and consulting services exclusively to veterinarians. He can be reached via e-mail at email@example.com.