Should I Hire an Associate to Eventually Buy My Practice?

It sounds like a perfect plan, doesn't it?

Hire a promising young dentist as an associate, work together for a year or two to see if you're compatible, and then sell them the practice when you're ready to retire. It’s clean, simple, and seemingly low risk.

Unfortunately, this approach fails far more often than it succeeds. According to the ADA, these arrangements fail about 70% of the time. In my experience working with hundreds of practices, I'd put that number closer to 90%.

Let me be clear: hiring an associate isn't inherently a bad idea. Associates can be fantastic for managing growth, providing coverage, and sharing the clinical workload. The problem arises when you bring on an associate specifically as a transition strategy with the expectation that they'll eventually buy your practice.

Why the "Training Your Successor" Strategy Fails

Most arrangements where an associate is hired with the eventual intent of ownership lack clear, well-defined parameters from the start. The relationship exists in a gray area where nobody really knows what they're committing to long-term.

The associate thinks they're getting a great opportunity to eventually own a practice, but there are no concrete terms about timeline, price, or conditions. The seller thinks they're training their successor but hasn't committed to any specific deal structure.

This lack of clarity creates problems that compound over time.

Why the "Trial Period" Approach Doesn't Work

Here's the reality: you don't need to "live together" for years to determine if someone is the right candidate to buy your practice. In fact, the longer you wait to establish clear ownership terms, the more likely the relationship is to end in disappointment.

Think about it from both perspectives:

• ‍From the associate's viewpoint: They're working in your practice, helping it grow, building relationships with patients and staff. After two or three years, when you finally get around to discussing a sale, they reasonably feel like they've contributed significantly to the practice's success. Why should they pay full market value for something they helped build?‍
• From your perspective: You've invested time training this associate, you've shared your patient base, and you've built the practice to its current value over many years. You deserve to be compensated fairly for what you've created.

Both viewpoints are valid, which is exactly why these situations become so contentious.

When Associates Don't Buy: The Worst-Case Scenario

I've seen too many situations where a seller has a well-paid associate for years, expecting to eventually sell to them, only to have the associate leave and open their own practice nearby—or worse, across the street.

When this happens, the associate often takes key team members (who have become their friends over the years) and a portion of the patient base. The seller is left scrambling to rebuild their team and recover their patients while simultaneously trying to find a buyer for a practice that has just experienced significant disruption.

This worst case scenario can seriously jeopardize your retirement plans and the value of your practice.

When Associates Make Sense

Don't get me wrong—there are many excellent reasons to hire associates:

• Managing growth: If your practice is expanding beyond what you can handle alone
• Providing coverage: For vacations, continuing education, or personal time
• Sharing workload: When you want to focus on certain types of cases or reduce your clinical hours
• Testing expansion: Before adding locations or services

These are all legitimate business reasons that can benefit both you and your practice. The key is hiring associates for these operational reasons, not as a transition strategy.

A Better Approach: Define the Terms Upfront

If you absolutely must bring in an associate with the intention of eventual ownership, here's what I recommend:

Set clear parameters from day one.

Before they start working, establish:

• The timeline for the ownership transition
• The method for valuing the practice
• The terms of the purchase (price, financing, etc.)
• What happens if either party wants to back out

Require an equity investment early.

Within 6-12 months, the associate should make some form of financial commitment to ownership. This doesn't have to be the full purchase, but it needs to be substantial enough to demonstrate serious commitment.

Get professional help.

The initial approach to discussing ownership is critical. If you start this conversation the wrong way, it's very difficult to recover. Work with experienced professionals who understand both the legal and interpersonal dynamics involved.

The Partnership Alternative

If you're not planning to retire for another 10+ years and could use help managing a growing practice, consider selling a portion now rather than hiring an associate with vague future ownership promises.

Bringing in an equity partner is often preferable to a series of unclear associate relationships. A partner has skin in the game from day one and shares both the risks and rewards of ownership. This aligns incentives much better than an undefined associate arrangement.

The Bottom Line

If you're considering bringing in an associate as a potential successor, ask yourself this question:

If they can't or won't make a commitment to ownership upfront, what makes you think they'll be willing to when you need them to?

Your practice represents decades of your life's work and a major portion of your retirement security. Don't put it at risk with an unclear arrangement that's statistically likely to fail.

Hire associates when it makes operational sense for your practice. But when it comes to transition planning, either structure a clear path to ownership with defined terms and early equity investment, or sell to a third party who's ready to make a commitment right now.

Your future self will thank you for taking the more certain path.