When you purchase an established dental practice, you are not only looking at patients, revenue, equipment and the office itself. There is usually an existing team in place, and the employment arrangements connected with that team can become an important part of the transaction.
For a dentist who is buying a dental practice, understanding the existing staff before closing can help uncover obligations that may not be obvious from the practice's financial statements alone.
Here are some of the areas worth reviewing with your lawyer before you take ownership.
Find Out How Long Each Employee Has Been With the Practice
Start by looking at who works in the practice and how long each person has been there.
A long-serving receptionist, hygienist or dental assistant may be an important part of the practice. They may know the patients well, understand how the office operates and provide continuity when ownership changes.
At the same time, an employee's length of service can affect the employment obligations associated with that person. Those obligations can vary depending on the employment agreement, local employment laws and the circumstances of the transaction, so they should be reviewed before closing rather than discovered afterwards.
Review Every Employment Agreement
Ask to see the employment agreements for the existing team and have your lawyer review them.
You need to understand the terms under which employees are currently working and whether those arrangements could affect you after the purchase. This is particularly important if you are considering changes to staffing, compensation or other aspects of employment after taking ownership.
Do not assume that the arrangements described by the seller are necessarily the complete picture. The actual agreements should be included in the due diligence process.
Do Not Ignore Employees Without Written Agreements
You may discover that some employees have been working at the practice for years without a formal written employment agreement.
That does not necessarily mean there are no employment obligations associated with those employees. Verbal or implied employment terms may still be relevant, depending on the jurisdiction and circumstances.
Rather than making assumptions about what the absence of a written agreement means, bring it to your lawyer's attention so they can determine how it affects the purchase.
Understand What You May Be Taking On
One of the reasons staff should be reviewed before closing is that employment obligations can have financial consequences.
For example, if you purchase the practice and later decide to make significant staffing changes, there may be notice, termination pay or other employment obligations to consider. Exactly what applies will depend on the jurisdiction, circumstances of the transaction and individual employment arrangements.
This is why looking only at current payroll expenses does not give you the full picture. You also need to understand the employment relationships behind those numbers.
Do Not Plan Major Staffing Changes Too Quickly
The existing team can also play an important role in helping patients adjust to new ownership.
Patients may have known the receptionist, hygienist or dental assistant for years, so keeping familiar people around during the transition can provide some continuity while they get to know the new dentist.
Making immediate staffing changes can remove that familiarity at the same time patients are already adjusting to a change in ownership. Unless there is a clear reason that requires immediate action, it can be useful to understand how the team operates before deciding what should change.
Have Your Lawyer Review the Staff Situation Before Closing
Employment issues should be reviewed as part of due diligence rather than left until after you own the practice.
Give your lawyer information about the employees, their length of service and their existing employment agreements. If agreements are missing or something about an employee's arrangement is unclear, identify those issues before completing the transaction.
The purpose is not to decide the future of every employee before you buy the practice. It is to make sure you understand the employment situation you may be stepping into.
Know the Team You Are Taking On
An established team can be one of the strengths of a dental practice acquisition, particularly when employees have strong relationships with patients and understand how the office operates.
However, those employment relationships also come with obligations that need to be understood before closing.
Review the staff, employment agreements and length of service with your lawyer, and do not assume that the absence of a written employment agreement means there are no employment obligations to consider. Understanding the team before you purchase the practice can help you make better-informed decisions about staffing once you become the owner.
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