After ten years of working on practice transitions for dentists, physicians, and other healthcare providers, I’ve learned quite a bit about why deals succeed and where they fail. I’ve witnessed doctors, prepared with a team of consultants, still, fail to get to the finish line. So what is the difference between success and failure? The answer is the “F” word.
It is true that some practice sales fail because the buyer-doctor could not secure financing, there was a material change in the target practice mid-deal or the parties could not get the landlord to agree to transfer the lease. For the most part, however, when parties are motivated and clear-headed about their goals, they find a way to get a deal done. So what hidden obstacle tracks doctors down through every deal decision and hampers their progress? What is the “F” word in deal transactions? It is a simple, but powerful human emotion: FEAR.
Fear if unacknowledged prevents us from taking the necessary steps to achieve our goals. Such is the case with doctors looking to sell or purchase a healthcare practice. If left unaddressed, fear will at best make finishing a transaction excruciatingly difficult, and at worst prevent a deal from consummating.
For seller-doctors, fear may take different forms. It may be the fear of leaving your practice, the one thing that has defined you for the better part of your adult life; the fear of not having a plan for your retirement; or sadly, the fear of facing a bad marriage once you stop working. For buyer-doctors, this may be a fear stacking more debt on top of a large student loan debt; the fear of juggling a new practice with a new and growing family; or the most obvious one, a fear of failure.
During the transaction, these fears lead to poor decisions and may ultimately kill the deal. It can be a seller-doctor unwilling to compromise on a minor deal point to let the deal move forward. Or a buyer-doctor unwilling to properly access a minor risk and allow the deal to close. Either way, the seller or buyer will make irrational decisions, because of their failure to understand what is truly motivating their mid-deal decisions: fear. This is their blind spot.
So what to do? Acknowledge your fears before you got into a transaction to sell or purchase your practice. A well-seasoned deal attorney understands this well and will help you address it. Coming out of law school, no one mentioned I would have to also become a therapist. But in deals where I’ve succeeded as an attorney, it has been mostly where I’ve shone a light on my clients’ fears and helped them understand what may be motivating their decisions.
Fear is a powerful human emotion. We need it. It protects us from getting hurt. However, it can just as easily prevent us from reaching our goals. But if addressed head on, fear can also motivate us to think clearly and take the right steps to get to where we ultimately want to be. Whether you are a seller or buyer, acknowledge your fears early and you will likely set yourself up for success.