Common Mistakes in Dental Associate Buy-Ins

By David Haynes, MBA, Vice President of National Practice Sales

Adding a partner to your dental practice is an exciting but intricate process. A successful dental associate buy-in can significantly impact your practice, finances and transition plans. Unfortunately, common mistakes can derail this process and lead to misunderstandings and frustrations for both parties involved. In this blog post, we’ll explore these pitfalls and how to avoid them.

Mistake #1: Ambiguous Agreements

One of the most critical errors is failing to establish a formal agreement between the current practice owner and the incoming associate. Relying on verbal agreements or vague understandings can lead to misunderstandings down the road. It is important to create a comprehensive partnership agreement that outlines the terms, responsibilities and expectations post-partnership. Explicitly defining these factors in the agreement will lessen ambiguity and help both parties fulfill their obligations.

Mistake #2: Associate Anxiety

Associates sometimes become impatient, anxious or frustrated during the often lengthy buy-in process. This can lead to a sudden departure from the practice, leaving both parties in a challenging situation. Effective communication and setting realistic timelines can help ease these tensions.

Mistake #3: Inadequate Finances

When you hire an associate, you evaluate their educational background and past work experience. In addition, you likely contact their references and run a background check. However, a credit check to determine if the associate is a qualified buyer is not usually a part of the hiring process. Practice owners often lack knowledge about their associates’ financial situations. Your associate’s financial stability can significantly influence the terms of the buy-in.

Mistake #4: Sweat Equity Concerns

As the owner, you will have to decide if sweat equity (ownership earned through hard work rather than financial investment) is an option. This decision should be made well in advance to avoid misunderstandings; otherwise, there may be potential conflicts about the price and terms of the buy-in. It’s important to note that your associate often has significant leverage, particularly when they have goodwill, a substantial patient base, or are the sole interested buyer.

Determining the value of the dental practice is a crucial aspect of the buy-in. Failure to conduct a practice appraisal can result in financial discrepancies and disputes. Conduct an appraisal before you hire an associate and then again after they have been working there for some time.

Dental associate buy-ins can be a highly rewarding transition for both parties when approached with care and foresight. By avoiding these common mistakes and investing in clear communication, well-defined agreements, and a shared vision for the future of the practice, you can set the stage for a successful partnership that benefits everyone involved. Then when you’re ready to exit, you will know that your practice’s goodwill, reputation and legacy will be in good hands.

If you have questions about associate buy-ins, please contact the Menlo Dental Transitions team.