The Practice Buyer's Corner - Random Musings from the Buy-Side
The Practice Buyer's Corner - Random Musings from the Buy-Side
The purpose of this blog is to share current, real world, experiences on the topics of practice valuation, practice transition, retirement planning, and building equity value - over time - in your dental practice.
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seanepp
seanepp

(Man, blogging is hard!) Also, Associate and Partner Contracts

7/1/2013 9:17:04 PM   |   Comments: 2   |   Views: 12132
First, happy 4th of July week everyone!  We've got incredible weather here in Minneapolis (for once!).  Hope you and your loved ones can enjoy some time off.

We wanted to share this post due to several recent encounters with multi-doctor practices where there was a solo owner and one or more associate (employee) doctors.  In each of these instances there was no or a poorly drafted contract with the associates. 

This can prove challenging for a variety of reasons:
  • No contractual restrictive covenant (RC) exposes the owner to the potential of severe patient attrition if the associate leaves and sets up shop nearby
  • No or fuzzy contractual compensation terms, benefits obligations, etc. can make it very tricky upon transition for the new owner - solo or group.  To maximize the value of the practice and ensure continuity all parties want to keep the existing providers in place for an extended term.
  • When contracting with associates it is common to offer them some form of buy-in terms.
  • It is really important to flush out whether or not they *really* want to be an owner or just signed on for that as a placeholder option.  This can work both ways as even those that initially want to own realize after a couple years that they're really not that interested in all that comes with "ownership".
  • It is absolutely critical to flush out any ownership issues/concerns with existing associates prior to reaching out to third parties who may be interested in your practice.

Best,

Sean

 


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