Rewarding and Retaining Your Staff in a Transition

This episode is sponsored by Monarch Practice Transitions.

Our host, Adam Christman, DVM, MBA, is joined by Chris Rocchio, DVM, founder of Monarch, on this episode of The Vet Blast Podcast, presented by dvm360, to discuss why staff retention is one of the most critical yet overlooked factors in a successful practice transition.

Throughout the conversation, Rocchio explains why staff retention is critical to maximizing a practice’s sale value, why owners should begin transition planning as early as 7 years before retirement, why last-minute signing bonuses often fall flat compared with equity-based strategies, and more.

Below is a partial transcript, edited lightly for clarity.

Adam Christman, DVM, MBA: Let’s talk about that, because it’s so important to retain staff during a transition of ownership. But the big question is, why?

Christopher Rocchio, DVM: We’ve all heard and seen the horror stories of a practice that’s the big practice in town that gets bought by a corporation, and the owner leaves, and all the staff leaves, and the next thing you know, it’s a 1- or 2-doctor practice, where it used to be a great big practice. So, for sellers, you’re trying to maximize the value you’re receiving, and that value has to come with all the staff, not only making it to a sale, but getting through a sale and coming out the other side, and we all want our practices to continue after we’re not there, so I think it’s important that these practices survive for 5, 10, 15 years after a transition.

Christman: Okay, and when should owners, to your point, be thinking about their options for rewarding and retaining staff during the future transition?

Rocchio: I think the earlier they can start developing a strategy for a transition, the better. We try to get involved with owners at least 7 years before they’re ready to retire, when most of the owners aren’t even thinking about that, but the earlier that we get involved, the more options they’re going to have to go through that process.

Christman: What are the most common options for retaining and rewarding staff in a transition?

Rocchio: So, obviously, the ones we see most commonly are signing bonuses, where basically you’re handing cash to associates or staff to agree to sign contracts and go through a transition.

Those are really not the best ways to do it. They’re kind of in panic mode. You really haven’t developed the strategy, so all of a sudden, you get to a sale, and you need people to cooperate, so you’re giving them cash. I think a lot of associates look negatively at that, so we would rather give them equity, either before a sale, trying to either sell them and become a partner, or during a joint venture, having them participate in the joint venture and be part owners with the owner.