What are the best techniques for negotiating a succession plan with potential successors?

1 Identify your goals

Before you start looking for potential successors, you need to have a clear idea of what you want to achieve from the succession plan. Do you want to retire completely or stay involved in some capacity? Do you want to sell your practice outright or retain some equity or income? Do you want to hand over your practice to a family member, a partner, an employee, or an external buyer? How much is your practice worth and how do you plan to finance the deal? How long do you need to prepare for the transition and what are the key milestones? By answering these questions, you can define your goals and priorities and communicate them effectively to potential successors.

2 Research your options

Once you have identified your goals, you need to research your options and find potential successors who match your criteria and vision. You can use various sources to find candidates, such as referrals, networks, associations, brokers, or online platforms. You should also consider the market conditions, the demand and supply for your practice, and the competition from other sellers. You should evaluate each potential successor based on their qualifications, experience, reputation, compatibility, and financial capacity. You should also check their references, background, and credit history. You should aim to have at least two or three viable options to compare and negotiate.

4 Negotiate the terms

After you have established rapport and trust with potential successors, you need to negotiate the terms of the succession plan. You should prepare a written proposal that outlines the main aspects of the deal, such as the price, the payment method, the timeline, the contingencies, the warranties, and the post-sale arrangements. You should also be ready to provide relevant documents, such as financial statements, tax returns, client lists, contracts, policies, and procedures. You should be flexible and open-minded, but also firm and realistic. You should avoid making unrealistic demands or concessions that could jeopardize your interests or reputation. You should also seek professional advice from a lawyer, an accountant, or a consultant to ensure that the deal is fair and legal.

5 Finalize the agreement

Once you have reached a mutual agreement with a potential successor, you need to finalize the agreement and sign the contract. You should review the contract carefully and make sure that it reflects the terms and conditions that you negotiated. You should also ensure that the contract includes all the necessary clauses and protections, such as confidentiality, non-compete, indemnity, and dispute resolution. You should also verify that the potential successor has fulfilled all the requirements, such as obtaining financing, insurance, licenses, and approvals. You should also prepare a transition plan that outlines how you will transfer your ownership, clients, staff, and assets to the successor and how you will support them during and after the transition.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?