What to Expect in an Employment Agreement After Selling Your Healthcare Practice

Understanding Post-Close Obligations in Healthcare M&A

When founders of healthcare practices, such as dental, optometry, veterinary, and med spa owners, sell to a private equity-backed DSO or MSO, they often assume the transaction ends at the closing table. But oftentimes, that’s just the beginning. Most private equity buyers require the selling provider to stay on under a binding employment agreement after selling. And the terms of that agreement can have long-term consequences on your income, freedom, and future.

We frequently advise providers who are surprised (or even spooked) by these post-sale employment terms. Sellers often don’t realize they’re signing on for a five‑year commitment with a restrictive non‑compete, which may limit their professional options long after the deal closes. It's one of the most overlooked but impactful parts of the sale. 

Here’s what you need to know about your employment agreement post close, and what you can negotiate. 

Why Post-Sale Employment Agreements Exist

When private equity groups acquire your healthcare practice, they’re buying more than assets; they’re buying stability. They need you, the founder, to stay involved long enough to:

• Maintain patient continuity and clinical production

• Mentor the associate providers who may replace you

• Preserve goodwill and brand equity

• Ensure a smooth billing, credentialing, and operational transition

  
  

That’s why it’s common in healthcare M&A to require a post‑closing employment agreement, often for a minimum of five years. Buyers want to lock in performance and protect their investment. 

What’s included in an employment agreement for sellers post-closing?

These key elements should be outlined in your employment agreement: 

• Term of Employment: Often 5 years in PE-backed acquisitions

• Compensation: Usually 30–35% of collections or net production or a daily rate, depending upon healthcare vertical; often less than pre-sale take-home

• Clinical Expectations: Number of clinical days, production goals, administrative duties

• Non‑Compete Clause:

  • In employment: typically 1–2 years post-employment

  • In purchase agreement: often 5 years, with broader restrictions

• Non‑Solicitation Clause: Limits contacting former staff or patients

• Termination Provisions: Definitions of “for cause” vs. “without cause” and impact on deferred compensation

• Earn‑Out or Holdback Terms: Payment contingent on continued employment or hitting performance targets

  
  

Common Pain Points for Sellers

We’ve seen more than a few providers rattled by these agreements. Here are common areas of concern:

• Unexpected Time Commitment: Many sellers expect a 6–12 month handoff, not a five-year workback term

• Potential Decrease in Take-Home Pay: The new comp model often excludes owner perks and deducts overhead, reducing actual income

• Reduced Autonomy: Vacation, scheduling, and even clinical decisions may require corporate approval

• Restrictive Covenants: Post-sale non-competes can limit future job options, even years down the line

• Equity Clawbacks: Missed targets or early exits may forfeit deferred or performance-based payouts

  
  

Plan Ahead: Talk to Your Legal and Tax Advisors Early

The best time to negotiate employment terms is before signing a Letter of Intent (LOI)—not after you’re under exclusivity.

It’s also critical to involve your CPA or financial advisor in the discussion. These employment agreements have serious tax implications that require planning. At Marti Law Group, we often attend strategy meetings with the client’s full advisory team to structure employment and earn-out terms that align with long-term goals.

Additionally, don’t assume the employment agreement non-compete is your only restriction. While employment-based non-competes are subject to tighter regulation, sale-based non-competes in the purchase agreement often extend five years and are harder to challenge.

Need to build out your team of advisors to help you navigate a deal? Here’s the team you need to assemble. 

What You Can (and Should) Negotiate

Negotiate early. Again, ideally pre-LOI. Focus on:

• Flexible scheduling or phased retirement

• Narrower non-compete radius

• Exceptions for family practice or teaching roles

• Clear definitions of “production” and “collections”

• Guaranteed salary or minimum base comp

• Transition to part-time or consulting toward end of term

  
  

Valuation Trade-Offs: Be Careful What You Negotiate

Sellers often want to push for increased salary from the original offer. While buyers may agree, the EBITDA multiple used to determine your sale price is typically reduced to account for that.

This is a subtle but significant shift. More salary now may mean less cash at closing. Buyers use this method to keep their investment risk neutral, but it can lower your total proceeds.

Final Takeaways

• Private equity‑backed sales typically require a post closing agreement with a multi‑year employment commitment tied to production

• These terms can significantly impact your lifestyle, autonomy, and financial outcome

• Early involvement of your financial advisor, CPA, and legal counsel is critical to preserve deal value

• Detailed negotiation, before signing LOI, is your best leverage

• Work with experienced healthcare M&A attorneys to protect your future

  
  

Navigate your sale (and life after) with confidence

At Marti Law Group, we specialize in helping healthcare providers sell their practices on the best possible terms, and that includes protecting you after the sale. From employment contracts and non-competes to complex tax planning and deferred compensation, we’re here to ensure your deal aligns with your goals. If you’re preparing to sell a dental, medical, veterinary, optometry, or med spa practice, contact us to schedule a consultation with our experienced M&A team.

Frequently Asked Questions

What is an employment agreement after selling a healthcare practice?

An employment agreement after selling a healthcare practice is a legally binding contract between the seller (often a provider) and the buyer—typically a private equity-backed group. It outlines the provider’s post-sale role, compensation, schedule, and restrictions like non-competes.

How long do I have to stay after selling my practice?

Most private equity buyers require a five-year minimum employment term after the sale. This commitment ensures continuity of patient care, revenue, and operational leadership.

What should I watch for in post-sale employment terms?

Pay attention to production-based compensation models, restrictive covenants (like non-competes and non-solicits), scheduling obligations, and termination clauses. These can significantly impact your lifestyle and income post-sale.

Is the non-compete enforceable after I leave?

Yes. Even if the employment agreement includes a 1–2 year non-compete, the purchase agreement often contains a separate five-year non-compete. These longer restrictions are typically enforceable in the context of a business sale, even if they wouldn’t be under standard employment law.

Can I negotiate the employment agreement before selling?

Absolutely—and you should. The best time to negotiate employment terms is before signing the Letter of Intent (LOI), when you still have leverage. After signing, your ability to change terms becomes limited.

Do I need tax or financial planning before signing?

Yes. Post-closing employment terms can affect your tax exposure and financial strategy. It’s critical to meet with your CPA and financial team (alongside legal counsel) before finalizing the sale. At Marti Law Group, we often participate in those discussions to help align the legal and financial pieces.