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Q&A: How two practices become one
I'm considering a merger with another local practice. How do I go about it?
Q: I'm considering a merger with another local practice. How do I go about it?
You have two options for a merger, according to Veterinary Economics Editorial Advisory Board member Dr. Karl Salzsieder, JD, of Salzsieder Consulting and Legal Services in Longview, Wash. One, you and the other owner can get independent valuations of your practices and then pay—or be paid—cash to balance out your shares of the new dually owned practice. The second method is payments over time—usually three years—of a percentage of gross revenue from the transferred clients brought to the merged practice. Either way, the merger should meet the following conditions:
Dr. Karl Salzsieder
1. Your practices must be close enough to each other that clients will transfer to the remaining location. Three miles is the maximum workable distance, Salzsieder says.
2. All the owners and doctors must agree to work in the merged practice at least three to six months. Doctors need to provide continuity of care so clients will follow them to the new practice.
3. If, after the merger, all of the owners and doctors don't deliver the same or increased client base and revenue, the price of each practice entity should be adjusted regularly for up to three years after the close of the deal.
Mergers can improve the medicine you practice and your quality of life, Dr. Salzsieder says—as long as you're smart about the transition.