There are many good reasons to sell your private practice. However, we know that the thought of completely walking away from the profession is not for everybody. You may be wondering if you can stay on after selling your business. Oftentimes, you will be strongly encouraged to do so, even if you’re no longer running the show.
Understanding Transition Agreements
One of the most common ways to stay involved after selling your business is through a transition agreement. This agreement can be in addition to your at-will employment agreement, which is discussed below. It outlines the terms and conditions under which you, as the previous owner, will continue to work with the new owner to transition the business you just sold.
Historically, transition agreements have ranged from a few months to several years, depending on the needs of both parties. However, with staffing shortages and a new owner’s desire to ensure a high retention of staff and clients, you should expect to work as long as you’d like post-closing. This arrangement supports a smooth handover and maintains continuity for clients and staff. A transition agreement may also provide additional compensation as you adjust to the new ownership structure.
The Role of an Advisor or Consultant
Another way you can stay on after selling your business is to step into an advisory or consultancy role. New owners may need help figuring out the personal aspects of the business, like customer or employee relationships. Your wisdom and experience are invaluable!
Advisory roles often come with a retainer fee or project-based compensation, offering financial benefits without the full-time commitment. If you have strong relationships with clients and staff, your advisory presence can reassure them during the transition and foster a sense of stability and continuity.
Employment Contracts and Earn-Outs
In most cases, the new owner will offer you an employment contract in addition to the consideration you receive for the business you just sold. This can be an ideal situation for both parties and allow you to continue working in a familiar environment while ensuring that the goals of each party are met: a smooth transition of client relationships, management, and the like.
Your employment contract should specify salary, benefits, your role post-closing, and whether you are an at-will or term employee. Employment contracts, while closely aligned to the purchase and sale agreement for the business, are generally stand-alone documents and have similar but different non-competition and non-solicitation terms. Your employment agreement may also directly correlate to any earn-outs you may be entitled to (i.e., where part of the sale price is contingent on the business’s performance post-sale and/or your continued support during the transition period).
If you’re looking to buy or sell accounting practices, Private Practice Transitions can guide you through every step of the process. Our experienced team specializes in helping private practice owners navigate the complexities of selling their business while exploring options to stay involved post-sale.
Contact us today for a free consultation, and discover how we can tailor a solution to your unique needs and goals. Let us help you achieve a smooth and successful transition that benefits both you and the new owner.
