Medical Professionals

The honest answer is: it depends, and that dependency is exactly the risk. The outcome depends on the legal structure through which you practise, the nature of the claim, the specific indemnity arrangements in place, and precisely how your assets and obligations are held. A company or practice structure does not create automatic protection in every circumstance, however it may feel safe from the inside.

Many practitioners assume the structure does more work than it actually does. A shortfall between a claim and available cover can, depending on the facts, expose assets that were never intended to be at risk. Whether that happens turns on details most owners have never had reviewed together: how the practice entity is structured, what the indemnity policy actually covers and excludes, and how personal and practice assets are titled.

The practical starting point is not more insurance in isolation. It is a coordinated legal, insurance and asset-ownership review, conducted together rather than by three different advisers each working from different assumptions about what the others have covered.

A verbal understanding between partners is not a funded succession arrangement, however long you have worked together. It is an intention, and intentions do not pay out.

A proper agreement needs to answer several questions before an event, not during one: who is the buyer, whether that is a surviving partner, the practice entity or an external party; what valuation method applies, and whether it still reflects how the practice actually earns; what events trigger the buy-out, since death, disability and voluntary exit often need different terms; and what mechanism actually funds the payment.

That funding question is where most arrangements quietly fail. A buy-sell agreement without matching life or disability cover behind it is a document describing a transaction nobody can afford to complete. The legal agreement and the insurance funding need to be checked against each other, not drafted and purchased separately by different advisers who never compared notes.

Saleability depends on far more than historic income, though income is usually the first and only thing owners measure. A buyer, whether a younger partner, an incoming practitioner or a corporate acquirer, is assessing whether the practice's value survives your departure.

That assessment looks at the patient base and how loyal it is to the practice rather than to you personally, referral sources and whether they are institutional or personal, existing contracts and lease terms, staff and systems that keep functioning without your daily involvement, and premises that support a transition rather than complicate one. A practice that depends entirely on the founder's personal relationships and reputation is harder to transfer at full value, however strong its current earnings look.

Reviewing those factors years before retirement, rather than in the final eighteen months, creates time to strengthen exactly what a future buyer will scrutinise: reducing personal dependency, formalising referral relationships, and building the systems that let the practice run without you in the room.