Case Study


Nancy would like to maintain the legacy she’s built by
transferring the practice to an employee in 6-10 years.

The Background

Nancy, 46, has been operating her private practice for 14 years.  She has grown from renting a 200 sq ft. clinic space with a part-time bookkeeper to owning a 3,000 sq ft clinic with 12 full-time employees.  She attributes her never ending referrals to her specialization as a Certified Orofacial Myologist (COM®) . As more referrals come and the case load increases, Nancy has begun delegating more responsibility to her two lead therapists, Kristin, 34 and Sarah, 36. 

Nancy enjoys working in the practice, and not on the practice.  She has never considered herself a “number’s person” and would much rather learn about the latest treatment techniques than look at spreadsheets and projections.  She understands the value of having expert guidance which is why she delegates certain tasks like insurance billing, filing tax returns and legal work to her external team of professionals.

Nancy cares for her employees as if they were her own family.  She provides them with reimbursement for CEUs and the latest assessments and therapy materials.  Every Friday, she takes a different employee to lunch to learn more about her, her family and professional development.  

During one of these lunches, Sarah informed Nancy that she was resigning to work for another clinician in town because she offered a more comprehensive benefits package.   Nancy was completely stunned by Sarah’s departure. She had always envisioned Sarah and Kristin taking over the practice when she was ready to ready to retire.  

The Challenges

  • Nancy is fearful that other therapists will leave for better benefits
  • Nancy has a clear vision for the practice and does not want to give up control until she exits
  • Nancy does not know a reasonable time frame is to exit the practice.
  • Nancy has never had a valuation calculated for her business
  • Nancy does not know if Kristin can afford to buy into the practice because she is saddled with student loan debt and has little savings.

The Conclusion

Based on the background details that we learned about Nancy and her practice during our Plan of CARE meetings, we knew that this practice was a prime candidate for an insider sale.  Nancy was able to clearly identify that Kristin should be the successor of the practice. Although Kristin does not have the assets or collateral to purchase equity, many insider sales fund the purchase of the practice from the future cash flow of the business.  Nancy must develop a succession plan that incentivizes Kristin to stay with the practice. This plan will contain specific benchmarks and incentives to ensure the practice valuation continues to grow so the proceeds can play an integral part of Nancy’s retirement.

Nancy continues to work with the Utterly team to implement the following… 

  • An industry leading benefits package (including health insurance, life insurance, short-term & long-term disability insurance, and a 401k retirement plan) to promote employee loyalty and grow the valuation of the practice.  
  • Calculate a baseline valuation for the practice to identify how much the business will contribute to the overall retirement plan.
  • Monitor the 8-year succession plan between Nancy and Kristin.  The plan mitigates Kristin’s lack of personal capital to initially contribute to the purchase
  • Fund the buy-sell agreement to ensure either woman’s family would receive appropriate value for the business if the other woman was not able to keep working through the end of the succession plan.
  • Coordinate and consolidate Nancy’s investment accounts to optimize tax strategies

All scenarios and names mentioned herein are purely fictional and have been created solely for training purposes. Any resemblance to existing situations, persons or fictional characters is coincidental. The information presented should not be used as the basis for any specific investment advice.

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