How Will You Be Remembered?

Mariana Bracic, B.A. (Hons), J.D. – Founding Lawyer, MBC Legal
Jon Walton, B.Sc., C.C.O.V.I.  – General Manager and Sales Representative, MBC Brokerage

We are consistently instructed throughout our lives that we need to plan ahead. We plan our days, we plan our educational path, we plan our careers, vacations, we even plan what happens to our estate after we pass through a will. But what of our practice, possibly our largest and potentially most valuable asset? Although we all plan many things, many of us fail to plan for our practice should we die or become disabled.

Sudden Death

No matter how careful we are, accidents happen. At MBC, we often receive frantic calls from a doctor or their family after a major accident. When it is the family calling, the situation is usually grim as it typically means the doctor passed away suddenly. In one such situation, the doctor was traveling to an event to see colleagues, was hit in a catastrophic car accident, and passed away on the scene. The family, of course, was devastated and grieving. Fortunately for this doctor who passed and for his family, he had planned ahead in case something unforeseen occurred. Along with his will describing what should happen to his estate, he left instructions on whom to contact and what to do with his practice should he pass away suddenly. The instructions indicated to his executor (and family) immediately to contact the professional business appraisal and transition specialist company he had selected (in this case, MBC Brokerage). That is an extremely prudent thing to do as it allows us immediately to place a locum in the practice, typically only days after the death. This makes a dramatic difference in maintaining and servicing the client base while keeping the gross revenue and cash-flow entering the business. We then performed an emergency appraisal on the practice and a speedy sale cycle to ensure the client loss and revenue loss was extremely mitigated to non-existent. This resulted in a sale that achieved the full appraised value for the family, while carrying on the deceased doctor’s legacy. This is an example of how an extremely unfortunate situation can be handled properly. Many other times, we’ve seen more unfortunate (and mismanaged) situations where the doctor passes unexpectedly and the family was not left with a road map or plan. They are understandably in shock and mourning for months before they react to the needs of the business. This has devastating consequences to the value of the business, which, while the family was grieving, has hemorrhaged clients, seen its revenue plummet and its value in the market decimated.

Illness that advances to terminal illness

This situation is mentally and emotionally very difficult. We have had more clients than we wish to recall who have contacted us with a serious illness. Even worse, many were contacting us far too late when their illnesses had become terminal and the end was in sight. A common pattern is that when a doctor is initially diagnosed, they very typically have the instinct to hang on to their business, reduce their hours, try to hire an associate and/or locum, and ride out the loss of clients, gross revenue and cash-flow as they fight to recover. This is statistically a recipe for disaster. Unfortunately, in many situations the practice becomes increasingly neglected as the owner’s illness persists or even advances.

As we all have experienced, no one cares for a practice or works as hard in a practice as the owner. The longer the illness persists, the more damage we see typically done to the business. Unfortunately, not all doctors recover, and the illness moves into the terminal stages. It is at this time that the doctor generally realizes that they need to sell the business. However, at this point, the business is in a deep decline having lost much of its value and saleability. Moreover, the concept of money is the furthest thing from the doctor’s mind, as they are emotionally trying to come to terms with their very imminent mortality, and trying to enjoy the little time they have left with their family. This results in a fire sale situation that usually leaves the family with far less money than they deserve, or even worse, a debt that they must deal with afterwards, not to mention the loss of legacy carrying on the doctor’s memory.

Every situation is different, but the one common element to the most successful and least tragic outcomes is advance planning. The single biggest variable in determining the outcome is when the doctor chose to involve us. From speaking with the doctors who become terminal, we see a reoccurring trend. Many wish that they sold their business when they were initially diagnosed with their illness, selling on a high and achieving the maximum sale price and value for their practice. This would have allowed them to spend more time with their family, focus completely on getting better, while greatly reducing the stress level they experienced while helplessly seeing their business suffer and decline.

The moral of the story is this: it never hurts to plan ahead but failing to plan can be catastrophic. Many appraisers and brokers have a templated form to add to your will giving instructions on how to proceed. Your family and legacy are important and should be taken care of and given the time they need to grieve. It is tragic when the most salient thing the family remembers about a doctor is how poorly they planned their affairs. We can help, contact us today.