A major concern of dentists when they are getting ready to sell their practice is when and how to tell their staff. The answer isn’t absolute because no two dental practices are alike. Each practice has its own personality. Our best advice to you is a firm, hearty ‘well, it depends.”
So, let’s tackle the first part of the question – “the when.”
When Should I Tell Staff I’m Selling the Practice?
The ideal time is when both the contract and lease have been signed by the buyer and the financing is in place – ideally two to three weeks before close. Many times, these pieces aren’t assembled until the very end, just before closing, making the conundrum of when to tell your team more difficult.
The staff, after all, is of great significance to the sale of a practice, whose value usually consists of some 80 to 85 percent goodwill. Personnel are a key component of that goodwill, built up over many years – and fear of the unknown is naturally employees’ top concern. They worry the new owner will cut their pay and benefits, alter their schedule…or even fire them. What kind of person is the buyer? Ethical? Unethical? Hard to work with?
How Should I Tell Staff I’m Selling the Practice?
With an “open sale” your team’s fears should be addressed as soon as possible. Tell them how important they are in context to the practice’s accumulated goodwill. Your staff’s long-term job security typically increases with a younger, more energetic buyer. A buyer who fires employees after closing, or cuts pay and benefits, would soon face mutiny: the staff would likely quit, and goodwill would plummet.
If possible, you as the seller – with the broker’s help – should vet the buyer’s character as best you can. Complete certainty will never be possible, of course, but red flags during research can be a useful warning.
What about the possibility that your staff will tell patients, causing word to spread that you’re selling? When patients hear this, they may begin to look for another dental practice before giving the buyer a chance to earn their trust – potentially causing a big revenue hit to the practice. Research suggests that insurance acceptance and convenience are the most common reasons that patients switch practices.
Many dentists have been with their staff for 20 years or longer and making sure they’re taken care of (along with patients) is among the most important factors in a sale. Some doctors will choose to have all, or at least key members, involved from the beginning. This can be beneficial if, say, one needs to retrieve important information from practice software.
If some or most of the team has been with the practice for fewer than five years, the seller might feel that there is no obligation to inform them. This poses a potential confidentiality problem and is therefore a delicate situation to navigate.
The bottom line is that it all depends. The ideal time to tell the staff might be just before the sale goes through, but not every doctor/staff relationship is alike. There are risks and benefits to all possible tactics. Gauge your situation and proceed wisely.