ESOPs for Doctors: A Tax-Advantaged Exit Strategy for Medical Practices with Special Guest, Bob Goettling

Wealth Planning for the Modern Physician

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15d ago 41:20

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In this episode, host David Mandell welcomes Bob Goettling, a seasoned investment banker and legal expert with over 30 years of experience in healthcare transactions, to discuss the emerging relevance of ESOPs (Employee Stock Ownership Plans) for physician practices. Goettling shares his professional journey, from early M&A work to helping physician groups explore monetization options, including ESOPs as a potentially powerful but underutilized tool.

Bob breaks down the core structure and history of ESOPs, describing them as trust-based leveraged buyouts that allow physicians and employees to own their practice while benefiting from significant tax advantages. He explains how the Bloom Organization itself became an ESOP nearly a decade ago, and how his team has since developed a tailored hybrid ESOP model for medical practices, especially as interest in private equity has cooled due to rising interest rates and negative post-deal experiences.

While ESOPs offer clear advantages—like retaining control and optimizing tax outcomes—they also come with complexity. Goettling stresses the importance of choosing the right advisors and ensuring a strong internal management structure. Not every practice is a good fit; size, structure, and strategic alignment are critical factors. The episode offers high-level insight into how ESOPs work, who they benefit, and what red flags to watch for in considering this alternative to traditional M&A routes.

KEY INSIGHTS

ESOP stands for Employee Stock Ownership Plan and enables employees to become beneficial owners through a trust structure.
Originally introduced in the 1950s, ESOPs gained traction in the 1970s due to government incentives.
Goettling and his team at Bloom implemented an ESOP for their own firm nearly 10 years ago and now advise physician groups on doing the same.
Tax benefits are significant: ESOP sellers can defer or eliminate capital gains, and the entity itself becomes tax-exempt.
ESOPs allow physicians to monetize their practice without surrendering control, unlike private equity deals.
The model is ideal for larger practices (15–20+ physicians) with existing governance (boards, CEOs, CFOs).
Complexity is a key barrier—ESOPs involve oversight from both the IRS and Department of Labor.
Hybrid ESOP models can account for partners, junior doctors, staff, and even future hires.
Mistakes often stem from poor advisory choices; experience with ESOPs is essential to avoid pitfalls.
ESOPs can be a game-changer for practices looking to stay independent while scaling strategically.

Learn more, including additional show notes, links, and detailed key takeaways, by visiting physicianswealthpodcast.com.

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