I do not know all the specifics of your situation, but I feel compelled to reply. It sounds like the owners of the practice are planning on selling to Private Equity. If that’s the case, you are possibly in a very strong position. Why? For two reasons: First, the practice owners are likely getting a 8-10x multiple (or so) upfront on the practice’s profits. So if your work generated, say, $400K worth of profit for them last year, they will be rewarded with and extra $3.5Mil or so of buyout money. Second, the Private Equity buyer loves younger guys like you in the practice to guarantee continuity of the practice in case the older guys take the buyout money and then quit. Your being there helps protect their investment. So, in a sense, you’ve been “played”. The owners have put themselves in the best position to sell the practice now.
If the above is true, it is critical for all involved that you stay on with the practice. In fact, were you to announce now that you are leaving, the owners could stand to lose $3.5Mil (or 8-10x whatever the amount of the net profit the practice made off your work last year), since the Private Equity buyer would then lower the buyout amount.
So what do you do now? It depends how much you want to stay in this practice and how important it is for you to live in your city for the long term. One thing NOBODY will compromise on is the non-compete. Both your current boss and the future owners need to protect their investment. I have a friend (non-Ophthalmologist) who was in the exact same situation. One with big “cahonas”. He told the current doctor owners that he would not sign an employment agreement with the new buyout P.E. company and would not stay with the practice unless he received a “retention bonus” at the time of the buyout. He got the owners to pay him (almost $300K) to stay!! You possibly might have the same clout. You can tell your current doctor owners that you want, say, $200K of their buyout money as a retention bonus in order to stay and sign an employment agreement with the new P.E. company. Yep, you heard me right. Make them pay up!!! They might get very angry at first and call it “blackmail”. But remember that hiring YOU put them in a position to make extra millions. In the end, they will NOT jeopardize losing the extra $3.5M (or whatever) and perhaps the whole deal, and they will pay you the $200K retention bonus. (For example: if there are two partners, they each would make $100K less from the buyout, so at the final monetary transaction they might each take home $2.7M upfront instead of $2.8M, while you get $200K … you get the idea…). The Private Equity buyout company could care less how the buyout money is split up between the doctors. In fact, your new P.E. owners wouldn’t even be upset, and as businessesmen they would likely greatly respect your business acumen.
(Also, keep in mind that I just picked a random number as an example. Perhaps they only made net $150K off your work last year, but that would still correspond to $1.2M of extra buyout money).
HOWEVER, even if you could do this, it doesn’t mean you should. Maybe you don’t like confrontation and aren’t the negotiator-type person. But I just want you to know that you might be in a very strong position!! Especially now, since Biden’s proposed tax plan will double the capital gains tax rate on gains over $1 Mil. So they want this deal done ASAP before the tax law change. Older Ophthalmologists everywhere are rushing to sell to their practices now to P.E. (Younger guys have been left hung out to dry. The new paradigm is for practices to sell to big business for quick cash and no longer to younger associates. And… in case you’re wondering, our practice sold to P.E. over 3 years ago, so I know a lot about this). That’s why you need to have a lawyer. Bring the idea up to the lawyer. Let him be the tough negotiator, if necessary.
