Issue link: https://www.massageandbodyworkdigital.com/i/70065
MERGING PRACTICES and that of the others, or where the value of each therapist's practice is far different than one another. Although not a merger as such, sometimes the best organizational route is to have each therapist continue as a solo practitioner, yet have an office-sharing agreement covering common areas, such as the waiting room, bathrooms, storage rooms, display areas, and clerical staff. In this arrangement, it is necessary to structure your agreement so that it is clear to all that this is not a legal partnership, only an association of individual therapists who share some expenses. An ideal situation to strive for is to equalize the contributions of each partner to the merger. However, most times this is not possible. The first draw on the group's profit would be to provide a stated return on the contributed interest from each. So, if Therapist A sold $100,000 in assets to the group, she would be entitled to a 6.0% return or $6,000, for example. If Therapist B sold only $50,000 to the group, he would take home $3,000, and so forth. This profit sharing would be in addition to the compensation for performing massages and other duties. The merged practice should assume joint responsibility for the premises lease, be responsible for payment of all accounts incurred for the benefit of all, and own or lease all furniture, fixtures, and equipment. It could be beneficial to form a holding company for this purpose. It would own the furniture, fixtures, and equipment, and the real estate (if part of the merger), and then lease these capital assets back to the partnership. Not all partners need to be shareholders in the holding company, but this arrangement gives added protection in that the capital assets of the partnership cannot be attacked in the event of legal action against any or all of the partners. It is important to set this up as if dealing with a third party—capital assets and the massage An ideal situation to strive for is to equalize the contributions of each partner to the merger. practices are kept separate from each other, and those assets rented to the joint practice are rented at fair value. Each participant should also have individual liability practice insurance, in addition to the group policy. THE PROFIT Fixed expenses and operating expenses, regardless of differing billings, should be equally divided between the therapists. They do not change if one therapist generates $1,000 or $10,000 a month. Variable expenses should be a percent of the total expenses based on individual billings. As all surplus income is distributed to the partners, there is no income tax concern. However, this formula may be overly simple for the larger professional practice. A senior therapist may be entitled to a greater share of the spoils than one of junior status. Therapist A may generate more clients than Therapists B to Z, and may expect extra compensation for this. Then, there is the previously mentioned challenge of compensation for management. It's not possible here to point out the myriad ways a compensation package could work. Those involved in the merger need to discuss and negotiate a compensation package agreeable to all, assisted by their facilitator or team leader. IT'S BUSINESS Mergers are not for everyone, but they are a viable alternative for many massage therapy practitioners as they face the challenges of the future. In any merger, it is good to remember that you never know who your business partner really is until you have been in business together for some time. It is important at the outset to establish the policy and asset distribution procedure for several scenarios, including opting out, retirement, getting out for medical reasons, involuntary exits where a partner is wanted out, the shuttering of the practice, etc. The legal language and the agreements about who does what and how each is compensated can be negotiated, agreed upon, and formalized. However, no legal document can ever take into consideration relationships—how well the therapists will get along with each other now or in the future. Yet, compatibility is the most important part of making it all work. The potential for competition and dissension with the joint practice partners must be eliminated, or at least reduced to a minimum. Often, by joining two or more borderline massage therapy practices, you create one successful unit, which through the efficiency of size, diversity, and cost savings produces substantial benefits for the therapists and enhanced services for their clients. Although they must be properly established, judiciously managed, and constantly monitored, most merged practices exist on an act of faith. You get as you give. Quid pro quo. and commercial real estate appraiser who now writes articles for a variety of magazines on business topics. He resides in Lloydminster, Alberta, Canada. Contact him at lloydmann@shaw.ca. Lloyd Manning is a semi-retired business connect with your colleagues on massageprofessionals.com 73